Fund performance has increased over the last six months but Scottish Widows' investments has once again topped the list of "dogs" in the latest round of "Spot the Dog".
Bestinvest’s latest “Spot the Dog” analysis of the worst performing of 956 funds reveals there has been a 30% decrease in the number of failing funds from £15.4bn worth of assets in 2003 or 133 funds to £10bn of assets and 92 funds.
Scottish Widows and SWIP still has the largest overall contingent of ‘dog’ funds, according to Bestinvest, as it has £1.6bn spread across 10 funds.
qualify for 'dog' status a fund has to have underperformed its benchmark in each of the last three years as well as underperformed its benchmark by at least 10% over that period, says Bestinvest.
prising new entrants onto the dogs list are Fidelity, Insight and New Star, says John Spiers, managing director at Bestinvest, albeit the New Star funds are six of those purchased from Edinburgh, Exeter and Aberdeen.
New Star owner John Duffield is not known for tolerating failure, it will be interesting to see whether he can turn these funds around,” says Spiers.
Two of Fidelity’s international funds - totalling £845m - fall into category, suggests Spiers, because “this is not the easiest of sectors in which to outperform” although “one would expect a group with the global might of Fidelity to do better”.
Insight claims fifth place with five 'dogs' totalling £788m.
A reduction in the number of ‘dogs’ is not necessarily as a result of improvements by fund managers, suggests Spiers, but largely thanks to out performance of small and medium cap stocks which have boosted actively managed UK equity funds. To qualify for 'Dog' status a fund must have underperformed its benchmark in each of the last three years and also have underperformed its benchmark by at least 10% over that period.
However, Abbey National UK Growth and Invesco Perpetual European Growth funds have managed to pull themselves out of the scathing portfolios list, says Spiers.
"Market conditions over the last 15 months have offered some reprieve to many fund managers, so it is not particularly surprising to see the number of 'dogs' fall significantly compared to January's edition. However this does mean that funds which failed to perform in these conditions really are 'dogs' with fleas and require special scrutiny.
It is disappointing to see Scottish Widows and Henderson yet again feature prominently, it suggests both groups are in need of an overhaul if they are to improve matters. Of the 93 'Dogs' featured, 64 have had a manager change in the last three years with 23 of those occurring in the last year. This should be positive news for investors, but it seems some of these managers are struggling to turnaround performance,” adds Spiers.IFAonline
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