£23 billion invested in 'dog' funds

A massive £23.16 billion is invested in underperforming 'dog' funds, according to BestInvest.

It represents a rise of 74% since the last 'dog' report in November last year.

The number of dog funds has risen to 94 from 90, with 27 of them in the Investment Management Association (IMA) global sector, up from just 11 last year.


Fidelity has £3.4 billion worth of assets labelled as dogs, with Fidelity European and Fidelity American Special Situations the worst performers. Newton, with £2.1 billion invested in dog assets, saw its global and European funds panned by the research.

BlackRock, Schroders and Scottish Widows brought up the rear, with £2 billion, £1.7 billion and £1.5 billion respectively languishing in dog funds. BlackRock's main UK equity offerings, the Schroder UK Mid 250 fund and SWIP's Europe and emerging markets funds were the main underperformers.

BestInvest also found that investors have stumped up £348 million in charges over the past 12 months for these dog funds, equalling well over £1 billion over the past three years.

Abject performance

Adrian Lowcock, senior investment adviser at BestInvest, comments that the industry has "little appetite" to address "abject" underperformance.

He adds: "With stockmarkets in turmoil, fund managers can no longer rely on rising markets to hide lousy performance. Meanwhile, investors simply can't afford to leave their precious savings languishing in dog funds.


"Now is the time for them to take action. It's never been more important for investors to take a close look at who is supposed to be managing their funds to make sure that their money is working as hard as possible for them."

To qualify as a dog, a fund has to underperform its benchmark in each of the last three years, and underperform its benchmark by at least 10% over the past three years cumulatively.

This article was written for Money Observer

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