Biggest equity fund flop culprits revealed
The biggest equity fund flops of the past six months have been revealed, with Aberdeen topping the league of shame.
The bi-annual report by Bestinvest called Spot the Dog showed Aberdeen had the highest number and largest value of underperforming equity funds. Fidelity was second on the list, followed by UBS and St James’s Place, as shown below.
Bestinvest said: “Spot the Dog is focused on identifying those funds that warrant special attention because they have performed particularly badly compared to their benchmark over a reasonable time period and consistently so.”
Value of dogs
1. Aberdeen Standard Investments £1,753m
2. Fidelity £954.67m
3. UBS £882.40m
4. SJP £471m
5. Jupiter £402.77m
6. Threadneedle £349.06m
7. Legg Mason £292.33m
8. Franklin Templeton £257m
9. Janus Henderson £241.59m
10. Schroders £220.50m
Number of dog funds
1. Aberdeen Standard Investments 4
2. Jupiter 3
3. Legg Mason 3
4. Fidelity 2
5. UBS 1
6. St James’s Place 1
7. Threadneedle 1
8. Franklin Templeton 1
9. Janus Henderson 1
10. Schroders 1
The report said: “In recent years Aberdeen Asset Management was one of the most prominent groups in our doghouse and following its merger with Standard Life last year, the combined business becomes Top Dog with £1.75 billion of assets across four funds, all of which came from the Aberdeen side.
“The trend has improved from a low point two years ago, when 11 Aberdeen funds were featured, and as the integration of the Aberdeen and Standard Life businesses progresses we expect a rationalisation of the combined fund range which will provide an opportunity for the group to put its dog days behind it.”
Fidelity was absent from the last edition but has “stormed in at second place thanks largely to the return of the Fidelity American fund.”
A single fund has landed UBS in the list - the £882 million UBS Global Enhanced Equity Income fund.
St. James’s Place has one fund in this edition – the St James’s Place Asia Pacific fund. It had three in the last report.
The report noted that fifth placed Jupiter is “not normally associated with poor performance” but its “position is down to the continued inclusion of three relatively Chihuahua-sized funds in its range – the Jupiter Global Managed and Jupiter Global Equity Income funds and the Jupiter US Small & Midcap Companies fund”.
BestInvest works out the dog funds based on these factors:
- Identifying funds that have failed to beat the benchmark over three consecutive 12-month periods.
- The fund must have underperformed the benchmark by 5% or more over the entire three-year period of analysis.
- Only considering funds that have share classes that are open to retail investors, stripping out those only accessible to institutional investors
- Excluding investment trusts or investment companies as their share price performance may not reflect the net asset value performance delivered by the fund manager due to discounts or premiums
- Excluding funds of funds/multi-manager funds because of the absence of like-for-like benchmarks
- Establishing a benchmark
- in most cases this will be an index that represents the overall movements in the market that the fund operates in – EG most UK equity funds the comparison will be against the MSCI United Kingdom All Cap index