The number of funds included in the latest 'Spot the Dog' report has fallen 13 per cent in the first six months of 2017 as the turn of markets benefited active managers.
The biannual report from Tilney highlights "dog" equity funds failing to beat their benchmark over three consecutive years.
Dog fund numbers have fallen from 41 in January to 34 as of the end of June, the second lowest figure since the report began in 2012.
As of the end of June, these funds accounted for £7.6bn of assets compared to £8.6bn six months previous.
The biggest declines were seen in the UK, Japan, and global emerging market sectors.
Tilney said January's report held four GEM strategies but none were included by the end of June.
Similarly, Japanese equity funds are no longer included while the number of UK equity strategies fell from six to one. The remaining dog equity fund is the SJP UK Equity Income fund run by RWC's Nick Purves.
The worst space for dog funds remains global equity.
Aberdeen - a fund group that alongside M&G had dominated the report in recent years - returned to the fore, accounting for the greatest share of poorly performing assets.
The firm had witnessed a steady decline in "dog" assets, Tilney said, but its £1.3bn Asia Pacific Equity fund was joined by the Asia Pacific and Japan Equity, World Equity and World Equity Income funds this time round.
The report said: "It is disappointing to see Aberdeen return to the top of the hall of shame once again with both an increase in the number of funds and a rise in assets to more than £2bn. This represents 27 per cent of the total assets highlighted in the report."
Overall, the report remained relatively positive for asset managers. Jason Hollands, managing director at Bestinvest, part of the Tilney Group, said: "Pleasingly there are just two funds are ‘big beasts’ with each having over a billion of assets, with most of the funds in it being pretty small in size. The overall drop in funds hitting our exacting criteria is also encouraging but it remains to be seen whether this is a technical blip or a sign of more meaningful trend coming through.”
This comes after Investment Adviser reported a stark rise in the proportion of active equity funds outperforming their respective benchmarks in the first half of 2017 compared with 2016. However, fund buyers were hesitant to suggest this was the beginning of a long-term trend.
Top howlers in the dog fund list
1. Aberdeen Asset Management
Currently in the process of a mega-merger with Standard Life, the company headed the hall of shame with over £2bn of assets, representing 27 per cent of the total, across five of its funds.
The primary culprit here is the firm’s £1.3 billion Asia Pacific Equity fund which has lagged the MSCI AC Asia Pacific index by seven percentage points over the three years to end of June 2017.
2. St James's Place
Snapping at Aberdeen’s ankles in second place with £1.7bn of assets in three funds is advice group St. James’s Place.
SJP appoints external fund managers to run its portfolios and its main offender in this edition is its £1bn Equity Income fund, run by boutique RWC, which carries ongoing costs of 1.61 per cent.
