Chelsea says its figures, which calculate funds which have been third or fourth quartile performers for three consecutive years on a discrete basis, have been impacted by a number of new entrants with assets of over £500m.
The number of funds with over £500m in AUM sitting in the Relegation Zone has risen from four to 13 since December 2010. Chelsea says life insurers and banks are the principal culprits in terms of having a significant relegation zone presence: the largest underperforming fund is the £4.2bn Halifax UK Growth Fund, for example.
Scottish Widows/SWIP has the most underperforming funds with six entries, with Legal & General responsible for five underperforming offerings.
The worst performer in terms of percentage underperformance relative to sector averages was the UBS Absolute Return Fund, which underperformed by 42.4% on a three-year cumulative basis. UBS UK Smaller Companies sits in second place with a 41.2% underperformance.
Chelsea has also repeated its concerns over the Cautious Managed sector, saying the performance of a number of cautious managed funds makes it “all too evident” that such funds’ holdings are “not what many cautious investors may have bargained for in terms of risk”.
“Of the ten cautious managed funds listed in the Relegation Zone, seven have lost money over three years[…] if you make an investment in the Cautious Managed sector take a good look under the bonnet of any fund before purchasing”, Chelsea’s report suggested.
