Despite a rally in global markets over the last three years as investors returned following the '08 sell-off, a number of funds have failed to keep up with peers.
Data from Chelsea Financial Services shows a list of the worst of the worst - ten funds which have delivered 3rd or 4th quartile returns over the last three discrete years versus their benchmarks.
Covering the whole Investment Management Association universe, its Dropzone includes a number of well-known funds such as Neptune's Japan Opportunities offering, run by the experienced Chris Taylor, as well as Standard Life Investments' UK Opportunities fund.
The worst ten funds, and the amount they have lagged their own sector averages, are below.
Ten funds stunting portfolio returns
% underperformance from sector average
|2||UBS UK Smaller Companies||49.81|
|Allianz Global Eco Trends||41.35|
|4||Barmac The Castleton Growth||39.75|
|5||Neptune Japan Opportunities||37.05|
|6||Standard Life Investments UK Opportunities||31.31|
|7||SVM Global Opportunities||30.10|
|8||JPM Cautious Total Return||25.07|
|9||Templeton Global Emerging Markets||24.57|
|10||Fulcrum Global Diversified||23.32|
As well as identifying the biggest underachievers over three years, Darius McDermott, managing director of Chelsea, said the number of underperforming funds in general had doubled over the time period, while assets in these funds has also swelled.
"The most disturbing finding in our latest review is that not only has the number of dud funds in our wider RedZone almost doubled to 130, but the amount of underperforming assets has more than doubled too," he said.
"An eye-watering £32.86bn of investors' money has been consistently languishing in the 3rd and 4th quartile for the last three years."
The Global sector has been the most disappointing in terms of overall numbers, with 28 funds in the RedZone. This is followed by UK All Companies (25) and Mixed Investment 20%-60% (21)
UK All Companies has by far the most assets invested in poor performers, with £13.77bn.
McDermott said four funds in the All Companies sector housed the majority of the assets that were delivering consistently poor performance.
"The majority of these assets sit in just four Goliaths of funds: Fidelity Special Situations and three Halifax branded funds (UK FTSE 100 Index Tracking, UK FTSE All Share Index Tracker and UK Growth) all run by Scottish Widows," he said.
Scottish Widows is attempting to improve performance by switching to an "enhanced index" strategy, but the funds included in the RedZone are not currently part of its plans in this area.
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