The bi-annual list throws the spotlight on fund that have underperformed in each of the last three years and by 10% or more over the three years.
The £1.278bn fund has been run by Nimmo since 1997 and has been considered a popular fund amongst investors. In the past three years, it has delivered a cumulative performance of 24.2%, compared to the IMA UK Smaller Companies benchmark average of 42%, according to FE Analytics.
In the second half 2013 and into 2014 the fund suffered in particular as a result of stock and sector rotation. Poor stock selection also contributed to the poor performance.
“It is a fund that has long been popular with advisers, with a focus on quality ‘growth’ companies – indeed we think part of the problem has been the style being out of step with prevailing markets,” Jason Hollands, managing director at Bestinvest, said.
In total four Smaller Companies funds were pulled into the dog category along with Nimmo’s fund. These include the Ignis Smaller Companies, JPM UK Smaller Companies and SF Webb Capital Smaller Companies Growth funds.
By sector
Since the last report six months ago, the number of dog funds has decreased to 53 to 49, including unit trusts and OEICs. The level of assets in the funds stands at £19.55bn.
Most dog funds were found in the IMA sector, unchanged from six months earlier. Meanwhile the Global sector ticked up with 20 funds identified as dogs, up from 15 funds half a year ago, and representing 16% of the funds in the sector.
The reputation of the US having a high failure rate market for active fund managers has been confirmed again, according to Bestinvest. In total 13% of the funds in the IMA North American fund universe were dogs, but improved from 22% six months ago.
This contrasts to Europe ex UK and UK Equity Income sectors, which did not feature a single dog, suggesting that fund managers have enjoyed more success in these sectors in recent years.
The big dogs
Big fund houses inherently feature more dog funds amongst their significant assets under management. But none of the big three – M&G, Schroders and Neptune – featured more than three dogs in July’s report.
M&G featured three large funds which represent 55% of overall dog fund assets in the report, or £10.7bn. The funds include the £6.7bn Recovery, the £3.1bn Global Basics and £924m American funds.
The Schroder £3.2bn Global QEP Active Value Fund, managed by the quantitative equity products team, was on the list, along with the £30.1m Schroder Global Climate Change managed by Giles Money. The £37.2m Schroder Japan Alpha Plus, managed by Nathan Gibbs, landed in the kennel as well.
For Neptune these funds include the £498.8m Global Equity and £2.5m Global Special Situations funds run by manager and CEO Robin Geffen, along with Ewan Thompson’s £7.9m Neptune Emerging Markets fund.
