Bestinvest’s Spot the Dog report, which highlights consistently underperforming funds, has revealed that investors have £67.4bn tied up in 137 poorly performing ‘dog’ funds.

The number of funds ranked as ‘dog’ funds is 137, the same as the last report, but the amount of investor wealth held in dog funds has jumped 26% to £67.4bn

While the number of dog funds is the same as last time, the amount of investor money held in ‘dog’ funds jumped from £53.4bn in the last report in August to £67.4 billion in this report.

One in four of the dismally performing funds are badged as sustainable, responsible, ethical or impact investments **.

Bestinvest says this is, in part, a reflection of ESG investments falling foul of the huge surge in oil and gas stocks and dismal returns on renewables in recent years  

Global equity funds continued to be the sector with the largest number of laggards with 44 funds – the same number as the last edition - holding £35.16bn of wealth.

UK Smaller Companies was the sector with highest proportion of dog funds as a percentage of its overall size with 11 “yapping terriers.”

The worst three performing funds overall were the Artemis Positive Future Fund which underperformed its benchmark over three years by 63%. It was followed by the Baillie Gifford Global Discovery Fund which underperformed its benchmark by 56%. In third place was the Baillie Gifford Japanese Smaller Companies Fund which missed its benchmark by 49% (see table below).

Aegon, L&G, SVM and AXA were among the other fund managers in the top 10 worst performing funds.

Among the 10 biggest ‘dog’ funds the SJP Global Quality Fund underperformed its benchmark by 26% over three years. It was followed in second place by the SJP Sustainable and Responsible Equity Fund which missed the mark by 24%. In third place was Fidelity’s Global Special Situations Fund which missed its benchmark by 14% over three years (see table below).

Also among the 10 biggest ‘dog’ funds were investments from Liontrust, Lindsell Train, JPM, BNY and Janus Henderson. 

Bestinvest says it is “concerning” that the amount of assets held by ‘dog’ funds has increased to £67.4 billion, up over a quarter on last time.

Spot the Dog is a biannual report which has been published for the last three decades. It highlights the funds that have consistently underperformed their relevant market index over three consecutive 12-month periods and by 5% or more over the entire three years analysed – in this case the three years ended December 31, 2024.  

Top 10 worst-performing dog funds overall       

Source: Spot the Dog, February 2025, Bestinvest from Evelyn Partners. Performance figures shown are net of fees with income reinvested.  

Top 10 biggest dog funds by size       

Source: Spot the Dog, February 2025, Bestinvest from Evelyn Partners. Performance figures shown are net of fees with income reinvested.  

Jason Hollands, managing director of Bestinvest by Evelyn Partners, said ESG funds had fared particularly badly, not helped by the financial markets.

He said: “The financial markets have been unsympathetic to funds with ESG properties in recent years in part because of soaring energy prices but also owing to negative returns from alternative energy shares both in 2023 and 2024. Over the three-year period covered in our latest report, the MSCI World Energy Index delivered a total return in GBP of 71.3%***, well ahead of the MSCI AC World Index total return of 28.6%.   
   
“Compare this to the alternative and renewable energy market, which fell out of favour during the post-pandemic surge in energy demand, and the story is very different; The MSCI Global Alternative Energy Index declined by –48.8% over the same three-year period highlighting why managers focused on green energy may have faced some challenges.  

“We also cannot ignore the tearaway performance of names such as Nvidia, the microchip maker, Alphabet (which owns Google) and other US giants such as Amazon, Meta Platforms (owner of Facebook) and Microsoft. Along with Tesla and Apple, this narrow band of stocks earned the moniker the ‘Magnificent Seven’.

“While this unique club may have lost some of their lustre more recently, they contributed to AI Frenzy at the end of 2023 and early 2024 that helped to propel the US stock market and global equities. This may explain why global and US equity funds not fully exposed to this extremely concentrated band of influential stocks struggled to consistently beat the markets.”  
   
He added that an area of concern was the size and number of the ‘big beasts’ featuring in the pack. Some 15 large funds – each over £1bn in size – account for £40.14bn, and 60%, of the lagging assets overall, a big step up from the 10 large funds rounded up in the last report with a combined value of £26.81bn. 
   
Mr Hollands said the purpose of the report was to encourage investors to monitor their portfolios at regular intervals to assess how well their assets are performing. He added the fund was not a ‘sell’ list but highlighted the need to keep a close eye on investments. 
   
Spot The Dog Report methodology: Bestinvest only analyses UK domiciled and regulated open-ended investment companies (OEICs) and unit trusts that invest predominantly in equities. It only looks at funds open to retail investors. To make it onto the list, Bestinvest applies two filters. First a fund must first have failed to beat the appropriate benchmark index over three consecutive 12-month periods, to highlight consistent underperformance. Second, the fund must have underperformed the benchmark by 5% or more over the entire three-year period of analysis – which in this case ends on December 31, 2024.   

** Funds explicitly badged as sustainable, responsible, socially responsible, ethical or themed to address climate change or an environmental remit.   

***Returns cited are in total return terms (including dividends) in GBP terms. Source: Lipper for the three years to 31/12/24). 

• You can register to receive the report here: www.bestinvest.co.uk/investment-insights/spot-the-dog