UK All Companies funds top worst performers list

25 September 2013

UK All Companies tops the sector league for serial underperforming funds, says Chelsea Financial Services.

UK funds may have enjoyed a strong run over recent months, but the IMA UK All Companies sector is the sector with the highest number of consistently poor-performing funds.

The latest Chelsea Redzone identifies funds that have underperformed their sector average over each of the past three discrete 12 month periods to the end of April. It finds 22 of the 115 offenders – almost a fifth – are UK All Companies funds, and more than half of those are trackers or tracker-type products.

The IMA Global and IMA Mixed Investment 20-60% shares are second and third, with 15 and 11 underperformers respectively.

A total of £33 billion is held in Redzone funds, of which almost a third is managed by Scottish Widows across seven poorly performing funds. Legal & General also notches up seven offenders, while HSBC has four.


Scottish Widows is no stranger to the underperformance tables, having been singled out as the worst culprits in the Money Observer relegation league in both 2012 and 2011.

But the Chelsea list also includes some high-profile surprises, notably in the shape of SJP UK High Income run by Neil Woodford, Cavendish AIM managed by Paul Mumford, and Jupiter Merlin Worldwide under John Chatfeild-Roberts.

The ten very worst performers – those that have underperformed their peers by the largest amount – are topped by Manek Growth, down a massive 83% on the sector average over three years.

No other fund underperforms by anything like such a margin: the second in the list, IM Hexam Global Emerging Markets, trails by "only" 33%.

Darius McDermott, Chelsea FS managing director, emphasises that a fund's presence in the RedZone doesn't necessarily mean investors should bail out; but they should be aware of the situation.

"Sometimes there may be good reasons for the underperformance and investors may decide to be patient with the manager. In some cases, ditching a perennial underperformer is the only thing to do," he says.

This article was written for our sister website Money Observer

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