Standard Life slammed in Chelsea RedZone report

Broker firm Chelsea has published its quarterly ‘RedZone’ report - previously known as the Relegation Zone - that aims to highlight the consistently worst-performing funds offered to retail investors.

The report shows that Standard Life Investments (SLI) now has the largest number of consistently underperforming funds, according to the research, with seven products being highlighted.

In a “reversal of fortunes” Scottish Widows Investment Partnership (Swip) - which has spent the past three years as the worst Relegation Zone offender - has more than halved the number of its funds that made the list to three.

However, Swip is now the only company to have a RedZone fund based in the UK Equity Income sector, after 10 other funds in the sector that have previously consistently underperformed have delivered an improvement.

“After almost three years of having the largest number of dud funds, [Swip] has managed to reduce the number by more than half and has handed the dubious distinction of worst offender to Standard Life Investments,” said Chelsea managing director Darius McDermott.

SLI funds that are named as perennial underperformers include its European Equity Index Tracker, a passive fund, which grew by just 0.63 per cent in the past three years. Also named is the Standard Life Japan Equity Index Tracker.

On the actively-managed side, Standard Life’s Ethical Corporate Bond fund run by Andrew Sutherland is named, as is Mr Sutherland’s Select Income fund. The Higher Income fund run by Arthur Milson is also highlighted.

SLI’s £385.3m UK Equity Growth fund run by Karen Robertson is also cited as a consistent underperformer, but the manager’s UK Equity High Income, which was named in Chelsea’s last report in October 2011, has now left the list.

The group has responded by claiming that 2011 was “dominated” by macroeconomic news and the “performance of a minority of our funds was disappointing”.

“In an environment in which fear rather than logic appears to have been driving investor positioning, company fundamentals have been largely overlooked and investor time horizons have become increasingly shorter,” a spokesman said.

“The historic performance of the vast majority of our funds has been robust, however, in a few cases short term numbers have impacted longer term returns.

“We remain confident in our investment process and see scope for significant improvement in fund performance when the market returns to a focus on fundamentals. We are pleased to see a promising start to 2012 with a broad spread of stronger performance across the range.”

Legal & General Investments was a “close runner up” to SLI in second place according to the report, which focuses on funds which have delivered a third or fourth quartile performance for three discrete years in a row.