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£26bn of assets in underperforming funds, says Chelsea FS

Almost £26bn of assets now sit in consistently underperforming funds, according to the latest Chelsea Financial Services relegation zone.

Poor performance from a number of larger funds has seen the amount of money invested in underperforming funds jump by 41 per cent since the last relegation zone reported £18.4bn in the relegation zone at the end of December.

There are now 13 underperforming funds with more than £500m of assets, compared to four previously. The largest fund is the £4.16bn Halifax UK growth fund, followed by the £2.4bn Prudential UK growth and the £1.9bn Legal and General European index fund.

Chelsea’s analysis uses a quantitative screening process to find funds that are third or fourth quartile each year for three consecutive years.

The number of underperforming funds has increased from 86 to 94, with 58 new entries to the list.

Scottish Widows/Swip again has the most underperformers with six, followed by Legal & General with five.

The biggest underperformer remains the UBS absolute return bond fund, which has a negative deviation from its sector average of 42.93 per cent over three years.

Well known funds in the list include Bill Mott’s £412m PSigma income fund while the £886m Invesco Perpetual UK growth fund, managed by Martin Walker, has joined the list.

Chelsea Financial Services managing director Darius McDermott says: “It is a concern to see so many large funds underperforming and raises the question whether these funds are so big it is beginning to impact on performance.”


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