Number of 'Dog' funds up 54%

In this edition of Spot the Dog, released on Friday (February 14), the team identified 91 funds which met the dog fund criteria — 54 per cent more than the 59 funds that appeared in the previous report six months ago.

According to the report — a six-monthly study which names and shames the worst performing equity funds based on the past three years — the level of assets held in dog funds had also jumped from £32.6bn to £44bn since the last report.

Invesco has topped the list of fund groups in the doghouse for the fourth time in a row as it led the pack by a long way in terms of both assets on the list and the number of funds that appeared. 

The fund house had £13.1bn of assets across 11 “dog funds”, making up more than a third of the total £44bn which appear on the doghouse list.

According to the report, Invesco’s presence continued to be led by its UK funds, which are managed by Neil Woodford’s protege Mark Barnett and were once seen as flagship products.

The dog list also includes four of Invesco’s European funds, a US fund and a Japanese fund, however.

Invesco said the funds mentioned in the dog list had a “disciplined valuation driven philosophy” which had been out of favour, noting that as active managers they would maintain their conviction and consistent approach to investing.

The spokesperson said Invesco believed the UK stock market continued to be undervalued but that a 'reversion to traditional valuation metric' would occur — a scenario which would see its funds perform better — and it therefore retained “full confidence” in the positioning of its UK equity portfolios.

Invesco was a substantial distance from the second worst culprit, JP Morgan, and its £3.8bn of assets on the list via its JPM US Equity Income fund, and the third-worst, Link, with its £3bn from the Equity Income fund formerly run by Neil Woodford.

Schroders and Hargreaves Lansdown made up the top five asset managers in the doghouse while M&G, Artemis, Man GLG Partners, St. James’s Place and Jupiter completed the set of 10. 

In the UK All Companies space, the former Woodford Equity Income fund topped the list, followed by Aberdeen Standard’s UK Equity Recovery and the three Invesco funds.

Tom Sparke, director at GDIM, said it was “no surprise” to see the ex-Woodford fund topping the UK list, adding its troubles had been “well-documented”.

The report’s pedigree picks included the Lindsell Train UK Equity, Liontrust Special Solutions and JO Hambro’s UK Dynamic funds.

SJP’s UK High Income topped the list for UK Equity Income dog funds, followed by Janus Henderson's UK Equity Income and Growth, UBS's UK Equity Income, and Hargreaves’ Multi Manager Income & Growth.

Global dogs included GAM Global Diversified, Artemis Global Income and Jupiter Global Equity, while the European list included Invesco’s European Opportunities and Merian’s European Equity fund.

Mr Sparke said he was surprised to see Merian on the European list. He said: “Their robust process usually produces excellent and consistent returns.

“Another former star and leader in the sector, Artemis' Global Income fund run by Jacob de Tusch-Lec, appears near the top of its list despite still being a favourite in its sector.”

Mr Sparke was also surprised the report had branded Man GLG Japan CoreAlpha as the Japanese top dog as it had “many advocates” and its longer-term performance was still “very good”.

VT De Lisle America was the worst North American fund, Jupiter Asian topped the dog list for Asia Pacific funds and SJP’s Global Emerging Markets fund was the worst in its sector.

When approached about being in the top 10, a spokesperson from Schroders said: “The mark of a good value investor is a contrarian mindset, a robust process and a long-term investment horizon.

“We recognise that there will be periods of underperformance given where we are in the market cycle and we remain confident that our strategies will perform for investors.”

M&G said it was disappointed to be included in the report and acknowledged the challenging performance across four of its equity funds while an SJP spokesperson said the firm continually assessed its managers and was well positioned to make changes when appropriate.

The spokesperson added: “It’s important to note that SJP fund performance is shown net of charges in this report, including ongoing advice, and therefore these analyses do not make accurate like-for-like comparisons.”

JP Morgan, Hargreaves Lansdown, Jupiter, Man GLG, Artemis and Link Funds did not comment.

imogen.tew@ft.com

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