When measured by ‘dog assets under management’, Fidelity tops the table with £3.4bn thanks largely to Sam Morse’s £3bn Fidelity European Fund, a fund he took over in December 2009.
Fidelity has not been included in Bestinvest’s Spot the Dog for several years but Morse, along with Adrian Brass’ £270m Fidelity American Special Situations Fund, has put the group back at the top of a list of funds that total £23.2bn.
To qualify, fund managers must underperform in each of the past three discrete annual periods as well as underperform their benchmark by at least 10% over the past three years. A total of 94 funds fall into this description.
Some more worrying statistics that come out of Bestinvest’s research include the fact that UK investors are paying close to £340m for consistently underperforming funds.
“Over the three years to the end of June 2011 this equates to somewhere in the region of £1bn that private investors have forked out for the underperforming managers in the nine key equity fund sectors,” according to the report.
The top-five groups include Fidelity, Newton, BlackRock, Schroders and Scottish Widows Investment Partnerships.
Newton’s main contributor is its £1.3bn Newton International Growth managed by Jon Bell since March 2008 which “which incorporates the best elements of Newton’s thematic sector analysis with well diversified stock selection” according to OBSR’s most recent ratings report.
BlackRock is represented by Mark Lyttleton’s £1.6bn BlackRock UK Dynamic and £560m BlackRock UK funds.
According to Bestinvest’s report: “Although this is Lyttleton’s first appearance in Spot the dog, both his UK funds are perilously close to being the worst performing of all UK All Companies sector funds in the report (only three places behind Manek Growth which is run by a former Charing Cross shopkeeper who won a newspaper competition a couple of times and decided to launch his own equity fund!).”
Schroders drops down one space to fourth place due mainly to Andy Brough’s consistently underperforming £1.5bn UK Mid 250, its fourth consecutive dog fund listing.
Bestinvest describes SWIP as “the worst repeat offender in the industry”, with seven funds categorised as ‘dogs’, with a combined £1.5bn under management. Its worst offenders are listed as the European Select Growth, European Growth, Emerging Markets, Global Select Growth, International Managed and Global funds.
The conclusion from this year’s list is that “depressingly” after three years of investment 59 of the 94 dog funds to appear in this autumn’s report failed to even protect the value of their investors’ funds after inflation, let alone deliver a positive real return.
