Despite having a world of companies from which to pick, global funds are looking poor over a three-year period, data from Bestinvest has revealed.
According to the London-based firm’s latest 16-page Spot the Dog survey on poorly performing funds, the Investment Management Association sector with the largest amount of ‘dog’ funds was the Global equity sector, with 20 funds appearing in the second quarter report, up from 15 in the first quarter.
Altogether, there are 49 dog unit trusts and Oeics, slightly down from 53 at the end of 2013, but still representing £19.55bn in assets under management combined.
Among the global fund dogs was the £2.97bn M&G Global Basics fund, of which the Bestinvest report said: “The strategy of the Global Basics fund, which focuses on the building blocks of the global economy, means its fortunes are partly intertwined with natural resources companies, many of which have suffered from reduced demand as the Chinese economy has slowed.”
UK smaller companies funds also suffered. One of the surprising entries to the list, according to Bestinvest, was veteran manager Harry Nimmo’s £1.3bn Standard Life Investments UK Smaller Companies Fund.
The manager, has outperformed the Investment Management Association UK Smaller Companies sector average over five, seven, 10 and 15 years, according to data from Morningstar.
A spokesman for Standard Life Investments said: “The recent market environment has been difficult for the fund as investors have responded to better economic data by rotating out of quality growth stocks and into more economically sensitive, cyclical companies. Long-term investors and followers of the fund will recognise the fund can suffer in this type of environment.
“However, we have seen periods of style rotation in the past, and they tend to be transitory. The valuation of many of the fund’s holdings has reduced, providing an interesting entry opportunity, particularly when the earnings prospects for the companies we invest in remain attractive.
“We will maintain our focus on quality companies with sustainable long-term earnings growth profiles. We are confident that our consistent approach, combined with the new ideas we continue to unearth, will help the Fund to continue to outperform over the long term.”
Right to reply
An M&G spokesman said: “We recognise that the performance on these funds has been challenged over the short term, and we are doing all we can to improve this. However, these funds are managed for long-term performance, and we ask our clients to take a similarly long-term view when investing.
“And it is worth noting that on a standalone basis the share price of the M&G Recovery fund has continued to provide investors with a positive absolute return, being close to its all-time highs.”
