“The overall drop in funds hitting our exacting criteria is also encouraging but it remains to be seen whether this is a technical blip or a sign of more meaningful trend coming through,” he added.
Hollands said the shift to lower cost and commission-free share classes and fund consolidation were likely to have reduced the number of underperformers, but added the stock bounce towards the end of 2016 may have helped out some value-orientated managers escape the list.
“The jury is therefore out on whether the industry has really cleaned up its act,” Hollands said.
He noted one limitation of the report and said: “Importantly, these filters are only designed to highlight the ‘worst of the worst’ and there are a great many more pedestrian funds out there including closet-trackers which largely follow the index but charge excessive fees for doing so.”
Groups entirely absent from the report that deserved recognition for their funds’ performance included Aviva, Artemis, Baillie Gifford, Baring, BlackRock, BMO Global (F&C), Invesco Perpetual, JO Hambro, Kames Capital, Man GLG and Royal London, Bestinvest added.
