Bestinvest points finger at worst performers

Fidelity, Schroders and Scottish Widows Investment Partnership (Swip) all fared badly in this year’s Bestinvest Spot the Dog report, which names the worst-performing funds in 2007.

Schroders topped the list as the worst-performing group, with £1.7 billion of underperforming funds. Funds it particularly identified as underperforming were Andrew Rose’s Schroder Tokyo fund and the UK Growth fund.

Robin Stoakley, managing director at Schroders, concedes the UK Growth fund had a poor 2007, but points out that a team was hired in November 2006 to run the fund.

He says: “Ed Meier and Vincent Vinatier took over the fund from Tom Carrol. They didn’t have a great first year, with performance hurt by being overweight in small caps and a position in Northern Rock.

“However, we believe they are both high-quality managers and should be given more than 15 months to prove themselves.

“In Japan, again the fund has underperformed but over the past 12 months to January 26 it is ranked seventh out 58 funds in the sector and has outperformed the index.

“At the time of the Bestinvest report it was still top quartile but underperformed the benchmark. However, given the strength of the index in 2007 so did many active Japanese managers.”

In this latest review of a universe of 698 funds, Bestinvest found 70 funds that it classed as “dogs”. The value of these 70 funds was £10.6 billion.

Scottish Widows had a total of £778m in the doghouse. One fund, Scottish Widows Global Growth, has been on the dog list for 10 consecutive years.

Ian Vose, head of global developed markets at Swip, says: “We put in place practical steps in relation to the structure and personnel within the global developed markets investment team over the past two years to create the environment to deliver improved performance.

“As a result of these changes, the team has seen improved performance in three of its four Global funds and we are confident that this success will also be mirrored across our large cap Japanese funds.”

Fidelity was the third worst performing group with £733m of underperforming assets. This was because of the underperformance of the Fidelity UK Growth fund, which Bestinvest says has had three different managers over the past two years.

The fund is now managed by Thomas Ewing.