More than £3.7bn ($4.9bn, €4.1bn) of assets are held in consistently underperforming funds run by the two firms dubbed the “worst of the worst” in the bi-annual ‘Spot the Dog’ report.
It uncovers funds that failed to beat their benchmark over three consecutive years and have underperformed the benchmark by 5% or more over the period.
In total, more than £7.6bn is currently sitting in underperforming funds, according to Bestinvest.
Worst offenders
Aberdeen, currently in the process of merging with Standard Life, has been dubbed the worst offender with five ‘dog’ funds running more than £2bn in assets underperforming.
Second worst was the beleaguered St James’s Place Wealth Management and its £1.7bn Equity Income fund which returned 8% less than the market over three years despite annual costs to investors of 1.61%.
It was the only UK equity fund out of a universe of 221 failing to beat its benchmark. SJP declined to comment.
A spokesperson for Aberdeen said the spike in number of funds was due to the impact of the Trump rally last year.
They added: “Our investment process is focused on our teams undertaking fundamental research – meeting with management and analysing the balance sheet and business model – means there will be times when we do underperform.
“But we firmly believe that by engaging with management, undertaking rigorous due diligence and ignoring day-to-day market noise, results in long-term performance.”
Serial offender
Janus Henderson also made the list of worst offenders with three funds, Henderson US Growth, World Select and Global Equity Income, labelled ‘dogs’.
Jupiter’s Global Managed and Global Equity Income funds as well as the Jupiter China and the US Small and Midcap Companies funds, dragged the firm into the dog house, while First State made a return to the list due to underperformance in its Global Resource fund.
However, there was good news in the data, with a 13% drop in the total number of funds failing to beat the benchmark since the last report, down from 41 to 34.
“Pleasingly there are just two funds that are ‘big beasts’, both have over a billion of assets, with most of the funds included in this report being pretty small in size,” Jason Hollands, managing director at Bestinvest, said.
