More than £13bn left rotting in 'dog' funds
Investors' cash in underperformers is rocketing, says financial body.
The amount of cash investors have in so-called dog funds has soared from £12.1bn at the start of the year to £13.3bn now. To qualify as a dog, funds must have underperformed in each of the past three years and by 10 per cent or more over the three-year period.
On those criteria there are 59 unit trust/OEIC dog funds, according to the latest Spot the Dog report from Bestinvest.
The figure is down slightly from the 64 highlighted in January, but the amount held in the underperforming funds has been swelled by rising markets. Fund management groups with the highest amount of investors' cash in the poor-performing funds have been named and shamed as Schroders (£4.1bn), Neptune (£1.4bn), Fidelity (£1.2bn), F&C (£734m) and UBS (£662m).
"Many will be surprised to see the mighty blue-chip investment house of Schroders featuring prominently," said Jason Hollands, managing director at Bestinvest.
"The culprits for Schroders' predicament are the Schroders US Mid Cap fund and a large fund with a value-style bias, Schroders QEP Global Active Value.
But James Cardew, global head of marketing at Schroders, slammed the inclusion of the fund: "We are very disappointed. By including the Schroders QEP Global Active Value fund Bestinvest has failed to recognise that the fund's client base is overwhelmingly institutional. Less than 1 per cent of the fund, only £20m of the £3.2bn is held by retail clients. The report is misleading."
Mr Hollands responded: "The fund is made available on a number of popular fund supermarket platforms, including Cofunds and Fundsnetwork, and clearly has a retail share class. It is therefore eligible for inclusion."
But he added that he regards Schroders as a high-quality investment manager. "We rate a number of their funds highly and see their range as strengthened further by the recent acquisition of Cazenove."
Mr Cardew pointed out: "Schroders' overall investment performance remains very strong and ahead of our target with 72 per cent outperformance over three years. In addition, our one-year numbers also look robust with 68 per cent outperforming at the end of March 2013."
So should investors act on the latest report and flee the underperforming funds? Mr Hollands says no. "As we explain in the guide, dog funds are based purely on statistical data and should not be regarded as a "sell" per se," he said.
"We use the examples of funds that a strong style bias that has been out of favour with markets or those that have turnaround potential due to new management to illustrate reasons an investor might decide to persevere with a dog fund. However, the gold rule is that if you find you own a dog in your portfolio, you need to explore whether or not to stick with it."
You can get a free copy of the latest Spot the Dog report from the website: bestinvest.co.uk/dogs
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
Mark Dampier: Woodford’s young companies could be the stars of the future
10 tips for taking out a personal loan
Seven fund superstars to trust with your cash
The 10 Best money-saving sites
Simon Read: Payday loans that are marketed at kids? Why not? They're already brainwashed into wanting products
- 1 'Nasa Confirms Six Days of Darkness in December': No, they don't - it's a hoax
- 2 Number of global billionaires has doubled since the financial crisis
- 3 Kentucky gang rape: 15-year-old boy left in critical condition after sexual attack by group at party
- 4 Of course, teenage girls need role models – but not like beauty vlogger Zoella
- 5 North Korean officials 'publicly executed for watching South Korean soap operas'
Pope Francis declares evolution and Big Bang theory are real and God is not 'a magician with a magic wand'
Huge surge in Ukip support after EU funding row, according to new poll
Ukip ‘exploiting grooming scandal’ to secure party’s first police chief
Nigel Farage: 'There’s nothing wrong with white people blacking up'
Muslims, immigration and teenage pregnancy: British people are ignorant about almost everything
Nigel Farage and Frankie Boyle clash over Andrew Lawrence's 'Mock the Week' criticism
iJobs Money & Business
£20000 - £23250 Per Annum pro rata: Clearwater People Solutions Ltd: Pro rata ...
£40 - 48k + Benefits: Guru Careers: We are seeking a Marketing Manager to join...
£45,000 - £65,000: Saxton Leigh: Our client is a well-known APAC Corporate and...
£60000 per annum: Ashdown Group: Compensation and Benefits Manager - Compensat...
Day In a Page
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000