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Judgement week

Now is perhaps not the best time for investment firms to judge the performance of fund managers given the recent market volatility.

But this week the Spot the Dog and Principal Investment Management White List made sure everyone was fully aware of who is being hit by long term underperformance.

Bestinvest’s ‘Spot the Dog’ has almost become an investment institution as it names and shames the worst in the market and managers that should be kept on a tighter leash.

The report shows that 70 out of 698 funds qualified for the list by failing to beat their benchmark index in each of the last three years, while underperforming the index by at least 10 per cent over that time.

As you’d expect the headlines have concentrated on the likes of Schroders, Fidelity and Invesco Perpetual, with the three big name UK retail players coming first, third and fourth on the list of assets in the dog house. But for me the big questions should be put at the feet of perennial underperformers Scottish Widows and Aberdeen.

Scottish Widows has to be mentioned first considering that over half of its funds have failed to beat their benchmark in the past three years, with 9.5 per cent of the range qualifying for dog status. Most damning of all is the presence of the £508m global growth fund on the list, its tenth consecutive appearance.

Meanwhile, Aberdeen has an astonishing 17.6 per cent (£619m) of its £3,526m assets under management in the dog house.

We also saw the unveiling of the Principal Investment Management White List last week, which shocked a number of advisers when it cast Jupiter income guru Anthony Nutt into the grey list following a difficult 2007.

Nutt’s disappearance from the elite band of twelve comes thanks to an early move to underweight mining stocks. In the first eight months of 2007, his £4bn fund made a loss of 2.07 per cent compared to a rise of 4 per cent in the FTSE All Share index.

His place went to Neptune’s Robin Geffen who recently qualified for the list after achieving his five year track record.

Principal head of managed funds Charles Brand says: “Geffen is unusual in running an aggressive portfolio of only 33 stocks and has deftly sidestepped weakness in the banking sector. The fund is likely to be an enduring member of the White List and a good compliment to other more conservative managers.”

Other additions to the White List include the return of Carl Stick’s Rathbone income fund, as well as Old Mutual equity income and St James’s Place UK equity income.

The trio replaced Ted Scott’s F&C stewardship growth fund, George Luckraft’s Axa Framlington equity income fund and Graham Ashby’s Credit Suisse alpha income retail fund, all of which have moved to the grey list, following underperformance in the past 12 months.

While turbulent markets are likely to see a number of managers taken down a few pegs you only have to cast a glance at Nutt’s long term track record on Jupiter income to realise that the fact he is top quartile over five years is just the tip of the iceberg. The likelihood is he will be back at someone else’s expense very soon.


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