Funds: The good, the bad and the ugly

We name the best – and worst – funds which could make you a small fortune or simply lose you money

The UK might have narrowly avoided another recession, but there are nearly 150 British funds that have had a triple-dip of their own and delivered dire returns for three years in a row.

More than £34bn of hapless investors' money is sitting in these consistently under-performing products, and with many of these funds loaded with high charges, it could be time for you to at least review your portfolio to see where the money is being lost.

The RedZone report released by Chelsea Financial Services reveals the repeat offenders, those funds that keep returning a paltry amount or are even losing you a chunk of money.

The report also shows funds that have languished at the bottom of the performance tables but for a valid reason could experience a turnaround in the future. At the other end of the scale, Chelsea highlights the best performers.

We have named and shamed those funds to give you the good, the bad and the ugly – but in the reverse order.

The ugly: Worst performers

One of the worst-performers is Manek Growth, which has, despite its name, done the opposite with your money. If you'd invested £1,000 three years ago, it would be worth just £778 now.

"This fund is the worst performing over three years, returning 50 per cent less than the average fund in its sector over this time – astonishing underperformance," says Darius McDermott, managing director of Chelsea Financial Services.

The UBS UK Smaller Companies is another poor performer, although it would have at least grown your £1,000 ever so slightly to £1,103.

Hexam's Global Emerging Markets fund has also been dire, losing you nearly 30 per cent and giving back only £713.94.

"The fund has an overweight in China, a market we are bearish on," says Jason Hollands at Bestinvest. "Investors should consider a switch."

The F&C High Income fund has had a tough time, delivering only 0.61 per cent. "While rates remain low, the returns are going to be dull and are likely to struggle to beat inflation," says Mr Hollands.

Another dire fund is the JP Morgan European Smaller Companies product, which would have grown your £1,000 to a measly £1,073.

"It is fair to say that this fund's mid and long-term stats are horrible, but if you look much shorter term there is the indication of either a lucky run or the demonstration of an improved management style," says Philippa Gee, who runs her own wealth-management firm. "I would be inclined to leave this fund to really prove itself and only then, if it does, consider supporting it."

The bad: Poor performers not worth writing off… yet

City Financial Strategic Gilt has had a tough time, but the manager's views are not too far off the mark.

"With gilt yields close to 300-year lows, he thinks prices will fall quite dramatically when yields normalise, leading to inevitable capital losses," says Mr McDermott. "As such, the fund is positioned to avoid heavy losses when this situation unfolds.

"We actually agree that gilts look overvalued and the risk to capital, once interest rates start to revert to normal, could be significant. This has been a bold position and has hurt performance, but may serve investors well as quantitative easing is unwound in the US."

Fidelity's Multi Asset funds, a range including defensive, strategic and growth products, have not fared that well. "You can't really expect these funds to significantly beat equity markets," says Adrian Lowcock at Hargreaves Lansdown. "If you're looking at the more-balanced fund strategy, you're likely to lag in raging bull markets. You could expect these funds to be more all-weather, so they will do OK in rising markets but won't outperform massively."

The L&G Multi-Manager funds have suffered from a large position in gold, the price of which has plummeted recently. "Fund performance won't have been helped by exposure to emerging market and China investments, as well as gold positions," says Mr Hollands.

The Aviva Investors Property Investment fund has underperformed others in its bricks and mortar sector, but should still be given a chance, says Mr McDermott. Property as an investment has had a torrid time, but is set for a rebound. And Aviva offers other top property funds, such as its Asia Pacific Property fund, Mr McDermott adds.

Another bad performer is the Jupiter Ecology fund, but it has a very specific mandate to grow your money while also protecting the environment. "The mandate means it continually underperforms other funds in the global sector it is in – so why is it not in another sector?" asks Mr McDermott.

The good: Best performers

Liontrust Special Situations is a top pick, growing your £1,000 to £1,755.

"The managers focus on the companies rather than the market, so they look for companies that have intellectual property – something that can't be easily copied," says Mr Lowcock. "They are experienced in identifying these companies and have really added value."

Cazenove's UK Smaller Companies fund has performed spectacularly, returning £2,013.

"Having a manager with the skill to pick winning stocks in this sector is essential," says Mr Lowcock. "This manager knows the market and can pick out the winners from the losers."

The M&G Global Emerging Markets fund has performed well and is still open to take your money, whereas many others in this space have closed. "A new fund with new money and a young manager, plus the launch coinciding with the beginning of a new bull run, is a powerful cocktail," says Mr Dennehy.

Threadneedle Monthly Extra Income is also among the best. "It has a reasonable income level and if you are happy with three quarters of the fund being in equities, then this could be a neat addition," says Ms Gee.

Threadneedle features again with its European Smaller Companies fund returning you £1,566. But Ms Gee cautions: "While the stats may appeal, I would be more hesitant – just how much of an allocation does the average investor need in European Smaller Companies?

"I would be careful of what holding you already have in this area and step back to let the manager prove himself."

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at

Louis van Gaal
An easy-peel potato; Dave Hax has come up with an ingenious method in food preparation
voicesDave Hax's domestic tips are reminiscent of George Orwell's tea routine. The world might need revolution, but we like to sweat the small stuff, says DJ Taylor
Arts and Entertainment
Jay Z has placed a bet on streaming being the future for music and videos
Arts and Entertainment
Festival-goers soak up the atmosphere at Glastonbury
Finacial products from our partners
Property search
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...

    Ashdown Group: IT Manager / Development Manager - NW London - £58k + 15% bonus

    £50000 - £667000 per annum + excellent benefits : Ashdown Group: IT Manager / ...

    Recruitment Genius: Sales Consultant / Telemarketer - OTE £20,000

    £13000 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...

    Ashdown Group: Training Programme Manager - City, London

    £40000 - £45000 per annum + benefits : Ashdown Group: Training Programme Manag...

    Day In a Page

    NHS struggling to monitor the safety and efficacy of its services outsourced to private providers

    Who's monitoring the outsourced NHS services?

    A report finds that private firms are not being properly assessed for their quality of care
    Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

    Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

    The Tory MP said he did not want to stand again unless his party's manifesto ruled out a third runway. But he's doing so. Watch this space
    How do Greek voters feel about Syriza's backtracking on its anti-austerity pledge?

    How do Greeks feel about Syriza?

    Five voters from different backgrounds tell us what they expect from Syriza's charismatic leader Alexis Tsipras
    From Iraq to Libya and Syria: The wars that come back to haunt us

    The wars that come back to haunt us

    David Cameron should not escape blame for his role in conflicts that are still raging, argues Patrick Cockburn
    Sam Baker and Lauren Laverne: Too busy to surf? Head to The Pool

    Too busy to surf? Head to The Pool

    A new website is trying to declutter the internet to help busy women. Holly Williams meets the founders
    Heston Blumenthal to cook up a spice odyssey for British astronaut manning the International Space Station

    UK's Major Tum to blast off on a spice odyssey

    Nothing but the best for British astronaut as chef Heston Blumenthal cooks up his rations
    John Harrison's 'longitude' clock sets new record - 300 years on

    ‘Longitude’ clock sets new record - 300 years on

    Greenwich horologists celebrate as it keeps to within a second of real time over a 100-day test
    Fears in the US of being outgunned in the vital propaganda wars by Russia, China - and even Isis - have prompted a rethink on overseas broadcasters

    Let the propaganda wars begin - again

    'Accurate, objective, comprehensive': that was Voice of America's creed, but now its masters want it to promote US policy, reports Rupert Cornwell
    Why Japan's incredible long-distance runners will never win the London Marathon

    Japan's incredible long-distance runners

    Every year, Japanese long-distance runners post some of the world's fastest times – yet, come next weekend, not a single elite competitor from the country will be at the London Marathon
    Why does Tom Drury remain the greatest writer you've never heard of?

    Tom Drury: The quiet American

    His debut was considered one of the finest novels of the past 50 years, and he is every bit the equal of his contemporaries, Jonathan Franzen, Dave Eggers and David Foster Wallace
    You should judge a person by how they peel a potato

    You should judge a person by how they peel a potato

    Dave Hax's domestic tips are reminiscent of George Orwell's tea routine. The world might need revolution, but we like to sweat the small stuff, says DJ Taylor
    Beige is back: The drab car colours of the 1970s are proving popular again

    Beige to the future

    Flares and flounce are back on catwalks but a revival in ’70s car paintjobs was a stack-heeled step too far – until now
    Bill Granger recipes: Our chef's dishes highlight the delicate essence of fresh cheeses

    Bill Granger cooks with fresh cheeses

    More delicate on the palate, milder, fresh cheeses can also be kinder to the waistline
    Aston Villa vs Liverpool: 'This FA Cup run has been wonderful,' says veteran Shay Given

    Shay Given: 'This FA Cup run has been wonderful'

    The Villa keeper has been overlooked for a long time and has unhappy memories of the national stadium – but he is savouring his chance to play at Wembley
    Timeless drama of Championship race in league of its own - Michael Calvin

    Michael Calvin's Last Word

    Timeless drama of Championship race in league of its own