The latest update of Chelsea’s Dropzone listed the ten worst-performing funds over three years in terms of underperformance from the sector.
If you missed it click here to find out which they were…
For investment managers this data is readily available and accessible through their own fund research, and yet the level of interest in these established lists is just as high among professional investors as private investors.
What is even more interesting is the more negative the compilation, the more crucial it is to take a look.
Sense check
Even though they can be snooty about execution only brokers, fund pickers want to make sure they have not got investors’ money in ‘Dog Funds’ or those relegated to the Dropzone.
Check out the five big names that topped Bestinvest’s Spot the Dog list back in January…
This is entirely understandable. If some of your clients held the Manek Growth Fund over the past three years, their returns could well have suffered, since it was the worst underperforming retail fund over the period, with returns lagging the sector average by 52.9%.
Fund houses too await these releases with bated breath – nobody wants to be listed as a firm with the largest amount of assets in ‘dog funds’.
On the flip side, the Pridham Report highlights the fund groups amassing the most assets – a feather in the cap for their marketing and sales teams – while the Sanlam White List (formerly the Principal White List) helps to identify the crème de la crème of equity income investing.
What are you waiting for?
What I want to know is why more private client investment managers do not make more of their internal fund lists, as I know they exist.
When it comes to this type of self-promotion DFMs are trailing in the dust of some of the big execution only providers.
For some, perhaps that is the way they like it, they prefer to be proprietary over their investment research and think if they gave away their most-favoured funds they could lose some of their mystique.
I like to think a middle ground could be found where DFMs don’t give away all their secrets but gain some publicity and potential new clients through being a bit more transparent about their investment selection process and top fund picks.
Let us know if you have something similar to the offerings from Bestinvest, Chelsea and Hargreaves Lansdown in the comments box below…
