Some 137 funds, dominated by strategies underexposed to AI and energy, have been flagged as laggards over three years in the latest Bestinvest ‘Spot the Dog’ report.
Together, the underperforming funds hold £53.4bn assets, though this marks a 9% fall by number and 44% fall by value on the £95.3bn named in the previous edition in March.
The bi-annual report highlights equity funds that have consistently underperformed their benchmark over three consecutive 12-month periods. To be eligible for the Bestinvest ‘dog house’, strategies must also have underperformed by 5% or more over the three-year period analysed.
Global equities housed the most underperforming strategies by sector with 44 responsible for £26.2bn of the assets named. However, this was a slight improvement on the 51 strategies at the start of the year.
Meanwhile, ESG funds made up a fifth of the overall tally, which in part reflects the unexpected surge in oil and gas prices on the back of post-pandemic supply chain pressures in 2021 and Russia’s invasion of Ukraine. Over the period, the MSCI World Energy Index returned 98%, compared to the MSCI World Index’s 28%.
The MSCI Global Alternative Energy Index fell 38%, highlighting sustainable funds struggles over the period.
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Jason Hollands, managing director of Bestinvest, said: “In 2023 and 2024, it has been the blistering performance of names such as microchip maker NVIDIA, Alphabet, Amazon, Meta Platforms and Microsoft that dominated the investment news. Along with Tesla which has had a tougher time in 2024, this narrow band of stocks have earned the moniker the ‘Magnificent Seven’.
“The Bloomberg Magnificent Seven Index, comprised of an equal weighting in these seven US mega caps has surged 42% over the past year, as the frenzy over AI accelerated.
“When you consider the Mag 7 now represents a third of the US S&P 500 Index by market capitalisation and 22% of the MSCI World Index, it helps to explain why global fund managers not fully weighted to this extremely concentrated band of influential stocks struggled to consistently beat the markets.”
Ten ‘great danes’
Ten funds with over £1bn assets, including three Fidelity funds and two SJP strategies, made the list. The largest, the £10.7bn SJP Global Quality fund, underperformed its benchmark by 27% over the three years.
However, Justin Onuekwusi, chief investment officer at St. James’s Place, questioned the methodology of the report.
“The performance of our funds is inclusive of our single ongoing charge, which covers the costs for the external fund manager, administration, and advice,” he said.
“Most of the funds that we are compared with in this analysis do not include advice and administration charges therefore unfortunately it is not a like-for-like comparison. The ‘unbundling’ of our charges in 2025 will simplify comparisons with our peers.
“In our view, investors should remember that past performance is not an indicator of future results, and should approach short-term rankings and recommendations with a healthy dose of scepticism. Our research clearly shows that selling poorly performing funds in the short term to buy that year’s top performers often negatively impacts investor returns over the medium to long term.
“While comparisons can be useful, consider the 2021 Spot the Dog report as an example. The worst-performing funds in that report outperformed the top-rated ones over the next three years in six out of nine categories, with returns averaging over 16% higher. Performance rankings like these can lead to detrimental investor behaviour.”
A Fidelity International spokesperson added that the firm takes extended periods of underperformance seriously and constantly monitors, reviews and takes action to ensure they meet the needs of clients.
In March, management of the £3bn Fidelity Global Special Situations fund was taken over by Christine Baalham and Tom Record. Since joining, Fidelity said the managers have been in the process of transitioning the portfolio.
Largest funds on the list
| Fund | IA Sector | Size (£bn) | Value of £100 invested after 3 years | 3-year underperformance (%) | |
| 1 | SJP Global Quality Fund | Global | 10.69 | £106 | -27% |
| 2 | Fidelity Global Special Situations Fund | Global | 3.34 | £121 | -12% |
| 3 | Fidelity Asia Fund | Asia Pacific excl Japan | 2.71 | £85 | -12% |
| 4 | Ninety One Global Environment Fund | Global | 1.63 | £96 | -37% |
| 5 | Fidelity Emerging Markets Fund | Glbl Emerg Mkts | 1.59 | £81 | -12% |
| 6 | Baillie Gifford Japanese Fund | Japan | 1.49 | £91 | -26% |
| 7 | Liontrust Sustainable Future Glbl Gr Fd | Global | 1.46 | £102 | -31% |
| 8 | St James´s Place Gr Euro. Progress | Europe excluding UK | 1.39 | £111 | -8% |
| 9 | Columbia Threadneedle Responsible Global Equity Fund | Global | 1.34 | £116 | -18% |
| 10 | Jupiter Japan Income Fund | Japan | 1.16 | £109 | -8% |
The Artemis Positive Future fund was named as the worst performer overall over three years, trailing its benchmark by 71% over the period. In March, the firm announced that the quartet of portfolio managers running the strategy had exited the firm, with head of impact equities Sacha El Khoury taking lead of the fund.
The strategy was followed by Baillie Gifford’s £490m global discovery fund, which lagged its peers by 65% over the three years.
Notably, while Terry Smith’s Fundsmith Equity and Nick Train’s Lindsell Train UK Equity funds made the list for the first time in March, the duo were not included in this edition.
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Biggest underperformers overall
| Fund | IA Sector | Size (£bn) | Value of £100 invested after 3 years | 3-year under performance (%) versus benchmark | |
| 1 | Artemis Positive Future Fund | Global | 0.01 | £62 | – 71% |
| 2 | Baillie Gifford Global Discovery Fund | Global | 0.49 | £40 | – 65% |
| 3 | FTF Martin Currie Japan Equity | Japan | 0.16 | £53 | – 64% |
| 4 | AXA ACT People & Planet Equity Fund | Global | 0.03 | £80 | – 53% |
| 5 | Aegon Sustainable Equity | Global | 0.18 | £82 | – 52% |
| 6 | IFSL Marlborough Global Innovation Fund | Global | 0.04 | £82 | – 51% |
| 7 | L&G Future World Sust UK Eq Foc | UK All Companies | 0.14 | £74 | – 51% |
| 8 | Baillie Gifford Japanese Smaller Coms Fd | Japan | 0.16 | £56 | – 47% |
| 9 | FSSA Japan Focus Fund | Japan | 0.06 | £70 | – 47% |
| 10 | Baillie Gifford European | Europe Excluding UK | 0.45 | £74 | – 46% |
Bestinvest’s Hollands added that the report is a reminder to investors to check their portfolio at regular intervals to assess the performance of their assets.
“It is important to stress that Spot the Dog should not be treated as a simple list of funds to ‘sell’, it does highlight the importance of monitoring a portfolio of investments and asking yourself whether you remain comfortable with your holdings or whether it is time to make some changes.”
“Funds can stumble for a myriad of different reasons – from poor decision making or a run of bad luck to instability in the team or because the fund has a style or process no longer favoured by recent market trends,” he added.
“Identifying whether a fund is struggling with short-term challenges that will later pass, or more deep-rooted issues with long-term consequences is vital for investors considering whether to remove an investment from their portfolio.”
