Chelsea FS names and shames worst UK equities funds

Chelsea FS names and shames worst UK equities funds

UK equities, and trackers in particular, have borne the brunt of volatile markets over the past three years, Chelsea Financial Services’ list of worst-performing funds has revealed.

According to the London-based adviser firm’s latest RedZone table, which uses FE data to name and shame the worst-performing funds, there are 239 funds, and total assets in excess of £101.5bn, in the RedZone.

According to the list, the UK All Companies sector fared worse over the past three years, with 44 funds and around a third of the assets – £36.6bn – falling into the RedZone.

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The Global sector came in second-to-last, with 25 funds and £6.9bn, and UK Equity Income took third place from the bottom, with 14 funds and £7.7bn.

Some fund houses had several funds in the bottom 20 funds. For example, managing director Darius McDermott said it was clear from the number of funds in the Red Zone, that “Aberdeen’s woes have continued”, with two in the bottom 10 performers alone.

RankFund% underperform-ance from sector average*
1stSF Webb Capital Smaller Companies Growth88.43%
2ndHC FCM Salamanca Global Property69.23%
3rdElite Charteris Premium Income39.18%
4thS&W Ilex Income38.48%
5thTM Progressive UK Smaller Companies38.21%
6thM&G Recovery35.45%
7thAberdeen European Smaller Companies Equity34.19%
8thAberdeen World Equity Income32.39%
9thSanlam Global Best Ideas30.54%
10thTU Unit29.65%

*Based on three-year cumulative performance

Mr McDermott said Aberdeen’s overall performance had not been helped by some Scottish Widows funds – which Aberdeen bought in a £650m deal, taking Scottish Widows Investment Partnership from Lloyds Banking Group back in 2013.

Several of these funds have failed to improve over the past few years, especially the passive funds. However, Mr McDermott admitted it was “almost impossible for Aberdeen to influence the total returns of the passive funds as it has no say over the pricing of the product. All they can do is track the market and hope for the best”.

Right to Reply

James Thorneley, spokesman for Aberdeen Asset Management, said: “Around the world, markets are currently being driven by the actions of central banks in cutting interest rates to ultra-low levels and using policy tools such as quantitative easing.

“Yet the cracks are beginning to appear – people are questioning the effectiveness of QE in terms of stimulating economic activity, while the attempts by the US to ‘normalise’ its monetary policy are unnerving investors, and forecasts for robust global economic growth are being revised down daily. The risks to financial markets are increasing.

“Aberdeen’s approach to investing in equities investment is quite simple. We are bottom-up stock pickers who emphasise company fundamentals. First-hand research is central to our process – no investment is made without interviewing the company’s management first. We believe our focus on fundamentals and quality positions us well for the long-term.”