Dog fund assets leap 74% to £23.16bn in Bestinvest survey

Nearly one in seven UK retail equity onshore funds are underperforming, as the overall value of assets in dog funds leaps 74 per cent to £23.16bn, according to Bestinvest’s latest Spot the Dog list.

The list shows 94 of the 682 funds, or almost 14 per cent, have failed to beat their benchmark index in each of the last three years, while underperforming the index by at least 10 per cent.

More than £23bn of UK investors’ money is sitting in underperforming funds in the nine sectors, up from £13.29bn in November 2010.

The sectors include UK all companies, UK equity income, UK smaller companies, Europe ex-UK, global emerging markets, Asia Pacific, North American, Japan and global.

IMA global sector funds were among the worst performers with 27 dog funds identified, up from 11 in 2010.

The top three fund management groups by assets under management on the list are Fidelity at £3.4bn, Newton at £2.1bn and BlackRock at £2bn.

The worst performing fund according to Bestinvest’s criteria was the £11.7m Allianz RCM global ecotrends fund, which was down 41 per cent over a three year period compared to the benchmark.

Bestinvest senior investment adviser Adrian Lowcock says: “The overall value of assets invested in dog funds has taken a shocking leap, rising over 74 per cent to more than £23bn.

“Once again it is clear that the industry has little appetite to address abject underperformance and that too few investors are willing to vote with their feet. Until they do it is doubtful whether fund managers will ever be sufficiently motivated to clear up after their dogs.”