Nearly £27 billion is invested in underperforming funds, a sharp rise of £17.31 billion over the past six months.
Investment adviser Bestinvest's 'spot the dog' report found that £26.55 billion of UK retail investors' cash is invested in 113 'dog' funds, up from 44 since February.
One in every six funds is now considered a dog, according to Bestinvest. To qualify as a dog, a fund has to underperform its sector benchmark in each of the past three years and underperform its benchmark by at least 10% over the past three years cumulatively.
The global fund sector is responsible for the largest number of dog funds - 32 - while the North American sector houses 23 dog funds.
The worst performers
Once again, Scottish Widows and Scottish Widows Investment Partnership (SWIP) top the list as the fund management group with the most poorly-performing funds.
Dog assets have risen to £5.98 billion from £2.28 billion over the past six months, and two-thirds of its assets are now classed as underperforming. The group's UK, European and emerging markets funds have been panned by Bestinvest.
Schroders and Fidelity take second and third place, with £2.39 billion and £2.21 billion invested in poorly performing funds respectively. With regards to Schroders, the Schroder UK Mid 250 makes a sixth consecutive appearance as a dog fund, while at Fidelity the Fidelity American Fund, Fidelity International Fund, Fidelity MoneyBuilder Growth and Fidelity UK Growth continue to underperform.
M&G and BlackRock also house dog funds, with £2.02 billion and £1.39 billion of assets in these funds respectively.
Adrian Lowcock, senior investment adviser at Bestinvest, says investors pay around £390 million each year in charges to dog fund managers for these poorly performing funds.
He adds: "Investors simply can't afford to leave their precious savings languishing in dog funds and wait for the fund managers to do something about it.
"With markets trading in a range, it has 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."
This article was written for our sister website Money Observer