St James’s Place has been named and shamed after its underperforming funds accounted for more than half of the total assets in ‘dog funds’.
The financial advice company defended its inclusion in the list saying four of its funds had changes to management and performance benefits which will take longer to see the results of.
The latest Bestinvest Spot the Dog report identified 56 dog funds, up from 44 in the January report.
The amount of assets held in these underperforming funds has more than doubled from £19.1bn in January up to £46.2bn in the latest report.
SJP was singled out for having six funds on the list, twice as many as any other fund group.
The company has £29.3bn across these six funds, which accounts for 63 per cent of the total dog fund assets featured in the survey.
The report defines a ‘dog’ fund as one which failed to beat its benchmark over three consecutive 12-month periods, and which has underperformed its benchmark by 5 per cent or more over the entire three-year period of analysis.
Tom Beal, director of investments at St James’s Place, said: “It’s important to note that the performance of these funds is inclusive of our single ongoing charge which includes the cost for the external fund manager, administration and advice.
“We continually monitor, review, and update our investment proposition to make sure we’re delivering the right outcomes for our clients. In the past two years four of the funds mentioned have undergone a change in manager and performance benefits of these changes will take time to filter through.
“80 per cent of SJP clients hold funds in a portfolio of funds, to help them meet their goals. Diversification is a key benefit of investing in a portfolio, giving a smoother exposure to the ups and downs of markets.”
The fund manager with the next most assets in dog funds was Artemis which had 5.8 per cent of the assets in the survey.
Artemis’ two US funds were on the list along with its £286mn Global Select fund.
Schroders and Scottish Widows each have two funds on the list.
Scottish Widows said this "feels like progress" for the group. The funds are Scottish Widows UK Growth and UK Equity Income funds which accounts for £2.1bn in assets.
Columbia Threadneedle has four funds on this year’s list, worth £1.9bn. The four were inherited from BMO Global Asset Management when Columbia Threadneedle took over its European business in 2021.
Abrdn also had two funds on the list this year, down from three in the last survey. This includes the £1.11bn Abrdn UK Smaller Companies fund.
Jason Hollands, managing director of Bestinvest, said: “With many fund managers failing to achieve this over the long term, Spot the Dog identifies the funds that require special attention because they have consistently performed particularly badly against their benchmark.
“Of course, every fund manager will go through weaker periods – whether that is a run of bad luck, or they are sticking to a style or process that may be temporarily out of fashion. Identifying whether these are short-term or structural factors is key and investors should ask some questions before deciding to stick with a fund or switch.”
Last week (August 10), the FCA pointed out that value assessments by some fund managers still needed to be improved, despite overall progress.
Going forward, the FCA said firms should make sure that their practice, including around delivering fair value, for other products and services is consistent with the various expectations arising from the consumer duty.
tara.o'connor@ft.com
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