Half of ‘buy list’ funds underperform

Half of funds included on buy lists on direct-to-consumer platforms have underperformed compared to their sector average over five years, research has found.

The Financial Times cites a study by consumer finance website Boring Money which looked the 29 most popular funds included on buy lists on the likes of Hargreaves Lansdown, Barclays Stockbrokers, TD Direct and Fidelity Personal Investing.

Based on figures from Morningstar, the site found that just half outperformed the sector average over the five years to the end of August.

Funds that performed worse than average over five years include the Schroders Income Maximiser, the M&G Global Dividend fund and the Man GLG Japan Core Alpha fund.

Newton Global Income, Jupiter European and Franklin UK Mid Cap were among the outperformers.

Boring Money founder Holly Mackay says: “I’m a proponent of active management but when you look at this it does make you wonder whether people would be better off going for passive funds, paying less and sticking with the middle ground.”

Hargreaves Lansdown told the newspaper three quarters of funds on the Wealth 150 list outperform their sector over five years by an average of 19 per cent.

Its data includes funds that have closed or moved during the period.