Consistently underperforming equity funds total soars to 56
Update
Bestinvest’s latest Spot the Dog report found the number of persistently underperforming funds has increased to 56, up 27% since February 2023.
Bestinvest classifies persistently underperforming funds, aka dog funds, as those that underperform against relevant indices over three consecutive 12-month periods, and by 5% or more over those three years.
The latest report found both that dog funds had multiplied (up from 44 in February) and that the size of consistently performing strategies had risen 142%, to £46.2bn.
The global sector included the highest number of dog funds, with 24 compared with 11 six months previously. These funds reflect around 15% of overall assets in the sector, and three-quarters of the total dog funds by assets, at £32.1bn, up from £4.5bn.
This rise in dog funds came despite strong performances from several US mega-cap tech companies, but Bestinvest noted that underperforming global funds either do not hold mega-cap names or hold a lower weight compared to their indices.
The report also identified nine underperforming funds with assets of over £1bn - up from six in February, with the top three coming from the global sector. Bestinvest noted that bigger groups dominated the list of dog funds, although a number of boutique houses also featured.
The worst performer was St James’s Place (SJP), which accounted for £26bn held in dog funds. Five SJP funds featured in the top ten, with its Global Quality, Global Growth, International Equity, and European Progress strategies securing the top four spots by assets under management. The firm’s Global Emerging Market fund was tenth on the list.
The other five spots, in order of assets under management, went to Scottish Widows UK Growth, Artemis US Select, Columbia Threadneedle Responsible Global Equity, abrdn UK Smaller Companies, and Troy Asset Management Trojan Income.
Bestinvest also noted that Invesco, which had dominated previous editions of the report, no longer had any funds in the doghouse. It also praised the Japan's smaller companies and emerging markets sectors for having the lowest number of strategies on the list.