Bestinvest have released their latest “Spot the Dog” report, which is essentially a list of investment funds that have been consistently underperforming.
These are all retail funds – ones that you might have money in as an individual investor or as part of your pension portfolio, rather than ones only open to institutional investors.
They must also fit a number of other criteria, such as being domiciled in the UK, so it’s certainly not an exhaustive analysis of all the investment funds out there.
Ignoring the cheesy name for a moment, Bestinvest says they have identified 119 “dog funds” managed by well-known companies such as JP Morgan, Schroders, St James’s Place, Invesco, M&G, and Hargreaves Lansdown.
To be designated a dog fund, they have to have underperformed by 5% or more over the last three years when compared to a suitable index fund, which tracks the movements of the market as a whole.
This filters out any funds where fund managers have experienced bad luck in one year, or where the entire market is suffering.
10 worst performing investment funds
The 10 investment funds below are the worst dog funds sorted by their three year return percentage.
In brackets is the three year return on £100 – as you can see, some are making a loss but some are simply not performing as well as others.
- M&G North American Value Fund: -42% (£107)
- GAM North American Growth Fund: -40% (£108)
- Legg Mason IF ClearBridge Global Equity Income Fund: -39% (£95)
- Fidelity American Special Situations Fund: -38% (£110)
- Ninety One Global Special Situations Fund: -38% (£94)
- Schroder Global Equity Income Fund: -36% (£98)
- TB Saracen Global Income & Growth Fund: -35% (£98)
- LF ASI Income Focus Fund: -35% (£59)
- NFU Mutual Global Growth Fund: -35% (£99)
- UBS Global Enhanced Equity Income Fund: -35% (£97)
So what if you have a dog fund?
To be clear, being named a “dog fund” doesn’t automatically mean you should kick it out of your portfolio but you should do a bit more investigating at the very least.
Bestinvest says: “As a reminder, Spot the Dog isn’t a list of funds that we think you should sell automatically – it’s a statistical analysis of how funds have performed over the last three years.”
Some of the dog funds, for example, are also on the company’s pedigree list – the best picks – because Bestinvest believes that they can still perform well in the long run.
That’s the thing – investment is a marathon and not a sprint and you need to be in it for the long haul.
I’d also like to direct you to this episode of Freakonomics radio, titled “The Stupidest Thing You Can Do With Your Money”, that may well prove illuminating.