Pension funds are in the Bestinvest doghouse

Some of the largest asset managers in the UK have funds in the dog house, representing £12bn of investor assets lingering in underperforming funds.

Some £3.96bn of this is in Scottish Widows Investment Partnership funds, while £501m of these are in Jupiter funds.

Bestinvest said Swip had undertaken measures to improve fund performance, including a major overhaul of its equity desk and the adoption of quantitative investment strategies for many of its funds, but added that it would “take time for the results to come through”.

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Swip’s ‘dog funds’, as highlighted by the report, include Nick Millington’s £1.4bn Scottish Widows UK Growth fund, as well as two UK equity funds run by James Clunie. However, despite his funds’ underperformance Bestinvest, said Mr Clunie’s long-short Swip UK Flexible Strategy fund was “showing signs of stardom”.

Jupiter’s inclusion in the list is due largely to its specialist Jupiter Ecology fund as ‘green’ funds have suffered generally run against broader indices.

JPMorgan Asset Management, M&G, Axa Investment Management and BNY Mellon/Newton did not feature despite managing extensive fund ranges.

Jason Hollands, Business Development & Communications MD at Bestinvest, said: “You should not automatically switch out of a fund just because it appears in Spot the Dog since action may already be under way to effect a turnaround in fortunes.

“If you hold investments, you really do need to periodically review them to make sure you are with managers who are delivering good returns that more than justify their costs.”

Peter Chadborn, director of Colchester-based IFA Plan Money, said: “We use multi-asset funds so we don’t specifically review individual funds but I would congratulate Bestinvest on reviewing pension funds if they’re doing that for first time.

“It’s just as relevant for investors and advisers to have a broad opinion of pension funds as well as investment funds, so it’s great they’re extending that.”