Investments  

Record number of ‘dog’ funds as value managers suffer

Record number of ‘dog’ funds as value managers suffer
 Credit: Hollie Adams/Bloomberg

The number of funds taken to the pound has reached a record high, with Invesco retaining top dog spot for the fifth time, according to Bestinvest’s latest Spot the Dog report.

In this edition of Spot the Dog, the team identified 150 funds which met the dog fund criteria — 65 per cent more than the 91 funds which 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 — the level of assets held in dog funds had jumped from £44bn to £54bn.

Invesco has topped the list of fund groups in the doghouse for the fifth time in a row, with 13 funds in the list and a combined ‘dog’ value of £11.4bn — more than a fifth of all dog fund assets.

The report notes that prominent among Invesco’s pack of mutts were funds previously managed by Mark Barnett, who left the fund house earlier this year after a prolonged period of poor performance.

The company said: “Invesco has over the course of the year made several changes and improvements across the teams that manage these portfolios to strengthen and develop our investment proposition.

“Our long-term focus and belief are that these valuation-disciplined funds hold an important role within clients’ portfolios.”

To be included in the list of dogs, the fund must have underperformed its benchmark by 5 per cent or more over the entire three-year period of analysis.

National advice firm St James’s Place is a close runner-up as eight of its funds, totalling £6.9bn, are in the dog house. It had previously ranked ninth.

But SJP refuted the report, claiming that as its funds’ performance was shown net of all charges, including ongoing advice and admin, the analysis did not make for a “like-for-like” comparison.

US fund giant Fidelity, Lloyds-owned Scottish Widows and Schroders make up the top five ‘dog’ funds, harbouring £3.8bn, £3.4bn and £2.7bn in the doghouse respectively.

Many of the funds on the list are run by value or contrarian fund managers, so the report added that “hopefully these funds will be temporary visitors to Spot the Dog as the economy recovers from the Covid-19 crisis”.

A Fidelity spokesperson said: “We take extended periods of underperformance very seriously, and constantly monitor and review our fund range to make sure it meets the needs of our investor base.”

Fidelity recently switched its investment approach and fund management team on its Fidelity American fund.

Meanwhile Schroders maintained that the mark of a “good value investor” was a contrarian mindset, a robust process and a long-term investment horizon. 

The spokesperson added: “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.”

Lloyds did not comment.

Top 10
RankGroupNumber of DogsValue of Dogs

Previous ranking

1Invesco13£11.4bn1
2SJP8£6.9bn9
3Fidelity3£3.9bnna
4Scottish Widows3£3.5bn4
5Schroders10£2.7bn4
6M&G7£2.4bn6
7Dimensional2£2.4bn16
8HBOS3£2.2bnna
9Jupiter7£2.1bn10
10Hargreaves Lansdown1£2bn5

An M&G spokesperson said the firm was disappointed to be included in the report and acknowledged the challenging performance of the funds, which it was “taking steps to address”.