By Jenne Mannion More than £25bn of UK retail investors funds have consistently underperformed their...
By Jenne Mannion
More than £25bn of UK retail investors funds have consistently underperformed their relevant markets over the past three years.
This was the central research finding from Best Investment in its most recent guide to the worst performing equity funds, called Spot the Dog.
Jason Hollands, deputy managing director at Best Investment, said many of the funds were household names and unit holders should consider a switch. He added that over the past three years the top performing UK fund increased in value by 279% while the worst rose by only 15%.
The main underperformers amongst UK funds were the Friends Provident Stewardship trust, admitedly restrained by its ethical policy, GA Equity Growth and the M&G Capital Fund, all of which underperformed the All Share, over three years by 25%. The Mayflower British Leaders fund underperformed the market by 26% over three years. The Standard Growth & Income, Sovereign Income and M&G Recovery have all long appeared in Spot the Dog and have underpeformed over three years by 13%, 22% and 18% respectively.
In the UK and International sector, where Best used a benchmark of 50% All Share and 50% MSCI World index, the ethical funds again did badly. City Financial Acorn Ethical fund was a major dog underperforming the market by 38%, the Clerical Medical Evergreen fund underperformed the market by 30%. Others, which each underperformed the market by 24% include the Abbey Global Opportunities fund, Aberdeen Ethical and Aberdeen Master Income funds. Hollands said: "The Aberdeen Ethical Fund is restrained by ethical investment policy whereas the Aberdeen Master Income is a fund of funds and high charges impact on returns."
M&G International Income dominated the International category, underperforming the MSCI World Index over three years by 31%. M&G International Growth was also in that list, underperforming the market by 24%.
Hollands said a highly-rated manager, Sam Morse, was appointed to manage the fund two years ago and Best Investment was now recommending the portfolio. Others in the international category include Prudential International Growth underperforming by 28% and Scottish Amicable Global Balanced by 29%.
Within UK Smaller Companies Funds, the Baillie Gifford British Smaller Companies underperformed the Hoare Govett index by 29% and Aberforth and Scottish Widows were also highlighted for low returns
European underpeformers included Credit Suisse European, Five Arrows GI Europe, Prudential European, Save & Prosper European Growth and Scottish Amicable European Opportunities. Within the North American Dogs were Stewart Ivory American fund, with three year underperformance of 38% against the S&P 500.
For a free copy of Spot the Dog, call 08705 501112
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