A whopping 150 funds have dropped into Bestinvest’s bi-annual Spot the Dog list of the worst performing funds. This is up 65% from the last report in February and the largest number on record going back more than 20 years.
The aggregate money managed by this cohort is a staggering £54.4 billion and includes 18 ‘Great Danes’ each holding over £1 billion of assets from household name fund groups including Invesco, St. James’s Place (SJP), Artemis, M&G (MNG) and Fidelity.
For the uninitiated, in order for a fund to qualify as a ‘dog’ it must have delivered a worse return than the market it invests in for three consecutive 12-month periods in a row, while also underperforming that market by more than 5% after fees over the entire three-year period.
Bestinvest sensibly cautions that Spot the Dog is not a list of funds that should be sold automatically as it is based purely on factual analysis of past performance, which is not necessarily a guide to how a fund will perform in the future.
However, it's notable that Covid-19 seems to have exacerbated the divergent performance of 'quality growth' and 'value' shares, dragging more funds with a value tilt into the doghouse.
The dispersion between the best and worst performing funds has also increased. For example, the worst-performing fund over three years in the Investment Association (IA) All Companies sector was down 51% while the best delivered 34% gains.
THE BIGGEST WOOFERS
Invesco retained the top dog spot for the fifth time in a row with 13 funds worth £11.4 billion, but Bestinvest notes that change is afoot and new managers have been appointed.
In second place in terms of assets was St James’s Place (SJP) with eight funds totalling £6.9 billion. Notably, blue-chip manager Schroder (SDR) now has 10 dog funds, the second largest number after Invesco, worth a combined £2.7 billion. Fund giant Fidelity took third place with £3.9bn spread across four dog funds.
At the other end of the spectrum and deserving of a doggy treat were Aviva Investors, Baillie Gifford, BlackRock, Evenlode, Fundsmith, JO Hambro Capital Management, Lindsell Train and Stewart Investors.
In the largest sector by total assets, the IA All Companies segment with over 270 funds, the top dog was the Legal & General UK Alpha Trust (B28PT70) which lagged the MSCI Small cap benchmark by 35% over the last three years. Meanwhile the best performer was the LF Lindsell Train UK Equity fund (B19B9X7), beating the benchmark by a handsome 29%.