Some 44 funds were rated as ‘dog’ funds in Bestinvest’s latest spot the dog report, up from 31 last year.
Schroders had the most funds on the list, despite Bestinvest naming only three of the asset manager's own funds as underperforming (the UK multi-cap income, European sustainable equity and European alpha plus).
This is because it also acts as the underlying manager of a number of Scottish Widows and HBOS funds.
Every fund manager will have moments of weaknessBestinvest
A Schroders spokesperson said the company is dedicated to delivering robust investment performance on behalf of its clients.
“We regularly review our investment performance to ensure that our funds continue to meet the needs of our clients and remain focused on navigating any short-term market volatility and generating long-term outperformance across our UK fund range.”
The Schroder ISF Asian Total Return, Schroder Asia Total Return Investent Company and Schroder Oriental Income were all on Bestinvest’s ‘pedigree’ list.
Methodology
The list includes funds that have both failed to beat their benchmark over three consecutive 12-month periods as well as having underperformed the benchmark by 5 per cent or more over the three-year period of analysis.
Last year saw nearly $30tn (£24.87tn) wiped off global equity and bond markets after high inflation, rising interest rates and the war in Ukraine unsettled investors.
Other fund houses ‘in the doghouse’ include St James’s Place, with its international equity fund on the list, and Hargreaves Lansdown, whose multi-manager situations trust also underperformed.
Last week, Hargreaves Lansdown said its funds have delivered value over the past year despite a number failing to return more than their benchmarks.
Some managers are better suited to tougher times, others to rising marketsBestinvest
Invesco was also named, due to the inclusion of its £2.8bn UK Equity High Income and Responsible Japanese Equity funds, totalling £2.96bn in assets.
A spokesperson for Invesco said: “The performance of the UK Equity High Income Fund and the UK Equity Income Fund has been notably better as we approach three years under management of Ciaran Mallon and James Goldstone.
“They remain focused on delivering the best possible outcome for our clients and their achievements to date are a foundation that they can continue to build on in years to come.”
Halifax's £3.2bn UK growth fund and its £1.7bn equity income fund also made it onto the list.
In total, the number of funds listed in the report rose from 31 to 44, which it says “represents a lot of investors’ savings in funds that should be doing better”.
Boutique problems
Cracks are beginning to show in boutique managers due to regulation in the past few years.
Funds from boutique houses, normally popular with investors due to the increased importance of their performance and lack of reliance on a big brand, on the list include Unicorn Asset Management which had a UK ethical income and UK income fund on the list, and Columbia Threadneedle’s navigator boutiques fund which specialises in boutique managers.
The report said it is vital to identify whether a period of underperformance is short-term or structural.
