Underperforming ‘dog’ funds hit record levels

Young finance expert analyzing financial charts on a smartphone

Young finance expert analyzing financial charts on a smartphone

The number of funds that consistently perform poorly in the markets they are investing in this year has increased by a third, new data show.

Bestinvest’s Find the report on dogs, which has been exhibiting underperforming funds since its launch in 1994, identified 119 market-based investment funds in its latest report, representing a total of £ 49.6 billion ($ 69.5 billion) in long-term customer savings.

The survey, which is published every two years, uses fund performance statistics to identify funds that have performed poorly compared to their performance.

To be eligible, the fund must meet certain criteria, including providing a lower return on the market in which it invests, for each of the last three consecutive 12-month periods. Secondly, it must also have performed lower than the market in which it invests, by more than 5% throughout the three-year period considered.

At least 15 funds on the list are managed by some of the biggest names in the financial services industry, each holding more than a billion pounds in cash to investors.

Giant Invesco Fund (IVZ) retained for the sixth consecutive place a “top dog” with 11 funds worth 9.2 billion pounds of assets.

Jupiter (JUP.L) climbed to second place after acquiring Merian Global Investors last year, while St. James’s Place (STJ.L) and Schroders (SDR.L) is ranked third and fourth respectively.

The report covers funds investing in a wide range of markets, including the UK, global equities, North America, Europe, Asia (excluding Japan), Japan and global emerging markets.

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The largest number of persistent shortcomings was found in the global equity sector, while North America had a fertile number of funds for dogs at 21.

Jason Hollandes, Managing Director of Bestinvest, said: “If your savings are tied to an investment fund that repeatedly gives a worse return than the market in which it invested then, then you really have to take a closer look and think about whether you can it is better to move it to another location.

“The differences between the funds with the best and the worst performance are huge and that is why it is extremely important to choose funds very carefully and then to monitor them carefully or to choose cheap trackers instead. The latter will not beat the return on the market, but will imitate them closely. “

He added that it is not always obvious to savers if their money has been tied to a dog fund, as most of the money is still being returned. Only 32 out of 119 lost money to investors.

“Of course, the past is not the future, and there may be times when it’s worth it,” he said.

“For example, if you have recently run a new manager with better results or because you believe that an approach that is not in your favor is about to return. However, if you really can’t find a compelling reason to stay invested in an investment that has also been launched, moving elsewhere can give your ISA or pension a new lease of life. “

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