Top ten worst investment funds named
Leading broker Chelsea Financial Services (CFS) has named its top ten worst investment funds, with Manek Growth taking top place in its 'Chelsea DropZone' hall of shame.
By comparing individual fund performance to the sector average over the three years to the end of April 2013, CFS calculated the ten worst-performing funds in the UK.
Manek Growth underperformed its sector average by a whopping 52.98%, making it by far the worst performer. The next worst fund was UBS UK Smaller Companies, bringing in 39.97% less than its sector average over 36 months.
IM HEXAM Global Emerging Markets (35.67% worse than its sector average), Aviva Investors Property Investment fund (30.87%), and Templeton Global Emerging Markets (28.05%) rounded out the worst five funds.
"There are just under £650 million worth of assets in the DropZone this time round," said CFS managing director Darius McDermott. "Thankfully, less than a tenth are in the worst three funds. Eight of the ten are equity funds, joined by one property fund and one bond fund."
CFS also looked at a wider selection of under-performers, placing those whose performance is a cause for concern into a 'RedZone'.
"While the British economy has narrowly avoided a triple dip recession, far too many British funds have not avoided a triple dip, with no fewer than 146 funds, with combined assets under management of more than £34 billion, in the wider Chelsea RedZone," explained McDermott. "These funds have all had third or fourth quartile performance over the last three consecutive years."
The top offender, in terms of number of funds in the RedZone, is Legal & General with nine. It is closely followed by JP Morgan (seven funds), with Scottish Widows and Fidelity in joint third (both with five funds).
"When it comes to investors' assets, however, Scottish Widows is by far the worst, accounting for more than a third of the assets in the RedZone at £12.74 billion, as their funds are so large," McDermott added. "Next in the list is Legal & General with £2.5 billion and State Street with £2.06 billion, most of the latter being money invested in the expensive Virgin UK Index Tracker, which they run."
The Chelsea Dropzone in full:
1. Manek Growth - 52.98%
2. UBS UK Smaller Companies - 37.97%
3. IM HEXAM Global Emerging Markets - 35.67%
4. Aviva Inv Property Investment - 30.87%
5. Templeton Global Emerging Markets - 28.05%
6. F&C High Income - 27.79%
7. Legal & General Growth - 26.67%
8. JP Morgan European Smaller Companies - 23.67%
9. Marlborough UK Income & Growth - 23.33%
10. City Financial Strategic Gilt - 21.96
Generic, loosely-defined term for markets in a newly industrialised or Third World country that is in the process of moving from a closed economy to an open market economy while building accountability within the system. The World Bank recognises 28 countries as emerging markets, including Argentina, Brazil, China, Czech Republic, Egypt, India, Israel, Morocco, Russia and Venezuela. Because these countries carry additional political, economic and currency risks, investors in emerging markets should accept volatile returns. There is potential to make large profit at the risk of large losses.