Spot the Dog: Number of consistently underperforming equity funds soars to 56

investmentweek.co.uk:

The report also identified nine ‘great danes’ – underperforming funds with assets over £1bn – up from six in February.

Besinvest classifies such funds according to underperformance relative for their relevant indices over three consecutive 12-month periods and by 5% or more over the three years — these strategies are deemed ‘dog funds'.

Bestinvest's Spot the Dog finds 42% increase in underperforming funds from six-year low

The report has not only seen an increase in the number of underperforming funds from 44 in February, but also discovered the size of the such strategies has risen by 142% to £46.2bn, from £19.1bn.

The global sector saw the highest number of dog funds, with 24 relegated to the ‘doghouse', up from 11 six months ago. They represent around 15% of overall assets in the sector and account for almost three quarters of the total dog funds by assets — £32.1bn, up from £4.5bn, Bestinvest said.

This was despite strong performance from several US mega-cap tech companies, but the investment platform noted the underperforming global funds either do not hold mega-cap names or hold a lower weight compared to their indices.

The report also identified nine ‘great danes' — underperforming funds with assets over £1bn — up from six in February, with the top three also coming from the global sector.

Bestinvest highlighted that bigger groups dominated the list of dog funds, although a number of boutique houses also featured.

The worst performer was St James's Place, which accounted for £26bn held in dog funds.

Five SJP funds featured in the top ten, with its Global Quality, Global Growth, International Equity and European Progress strategies landing in the top four spots, respectively, according to assets under management.