Fund managers named and shamed

According to research from Bestinvest, an independent financial adviser, some of the UK’s top fund managers have been named and shamed in the latest list of ‘dog funds’ for consistently disappointing their investors.

A description of a ‘dog fund’ is a fund that has underperformed its benchmark in each of the past 3 years and by at least 10% over the 3-year period.

Bestinvest revealed that well-known, Schroders, is the worst offender with £1.17 billion in ‘dog funds’. Closely followed are other renowned fund managers including Scottish Widows with £778 million and Fidelity with £733 million. Invesco Perpetual with £726 million and Aberdeen with £619 million.

Another big portfolio that has entered the dog list is Artemis UK Growth. The fund has struggled to outperform over recent years and returns have been volatile.

Stephen Marriott of Bestinvest said the £607 million Schroder Tokyo fund might have a valid excuse as Japan was particularly challenging last year, however, there should be no excuses for Schroder UK Select Growth, which has experienced yet another bad year and is set to perform under the stewardship of its latest set of managers.

Over half of Scottish Widow’s funds have failed to beat their benchmark over the last 3 years and as such Bestinvest recommends holders of Scottish Widows funds to have a thorough review of their holdings. Funds from the group that appear on the list include its Emerging Markets, Japan and Global Growth funds.

The biggest underperformer on the list is the £733 million Fidelity UK Growth. The struggling fund has had 3 different managers in the last 2. Fidelity appointed an ‘unknown’ last year, 30-year-old Tom Ewing, with the job of reviving the fund’s performance.

Mr Marriott concluded by saying, recently the market has been a dog-eat-dog environment. Since last summer, the credit squeeze has brought some challenging market conditions with a knock-on effect on funds with high exposure to banking, real estate, retail or small cap. However, it is all too easy to hold market conditions responsible. The simple fact is that too many fund managers are failing to reach the required standard.

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