Scottish Widows Investment Partnership has topped the Bestinvest Summer ‘Spot the Dog’ report as the worst offender, with 10 funds on the list representing two-thirds of its assets under management.
Investor money held in dog funds across 10 key investment sectors jumped to £26.6bn from the £17.3bn recorded in the last report, published in February. The number of funds rose from 44 to 113, during the same period as difficult financial conditions and continued political uncertainty continued to batter markets.
Scottish Widows/Swip was singled out as the worst offender in the list with just under £6bn held in dog funds. However, it was joined by Schroders, Fidelity, M&G and BlackRock in the top five.
Bestinvest senior investment adviser Adrian Lowcock says: “The overall value of assets invested in dog funds has rocketed in the last six months. The report now excludes the initial rebound from the 2008/2009 financial crisis.
“Unfortunately, there are still some managers who have not woken up to the new conditions. The number of dogs has risen to a worrying level, with nearly one in six funds being a dog.”
He adds: “The amount investors pay to poorly performing managers has almost tripled as investors are paying £390m per year with dog fund managers taking home £1.17bn over the three years they have been underperforming. It is hardly surprising investors are concerned about the fees they pay.”
Responding to the report’s findings, a Swip spokeswoman says: “In April of this year, we announced that, in response to changing client needs, we would further reposition our £54bn equities business to focus on global and specialist active equities in addition to quantitative equities.
“This means that we are in the process of transitioning a number of our equities funds, including those in the survey, to the new equities strategy. Swip remains committed to active equities management and will compete in those markets where we have confidence that we can generate strong investment performance and build long-term, valuable relationships with clients.”
Lowcock acknowledged a number of groups had responded to the report positively, but others “seem determined to ignore their managers repeated appearances in Spot the Dog”.
A copy of the report can be accessed by clicking here.