Tilney Bestinvest demotes ‘haunted’ M&G Recovery to sell

Tilney Bestinvest has slapped Tom Dobell’s M&G Recovery fund with its worst rating and urged investors to sell.

The £6.3bn fund has tried investors’ patience long enough and Tilney Bestinvest advised moving to better performing peers.

A five-star fund in early 2012, it has gradually fallen in the estimations of the Tilney Bestinvest research team. It was knocked down to two stars in November last year.

Tilney Bestinvest senior research analyst Rob Harley says the fund has continued to be “haunted” by poor stock selection.

It has a hefty 7.65 per cent stake in oil giant BP which was recently hit by a US court judgement that would see its punishment for the 2010 Deepwater Horizon disaster soar.

Instead of the $3.5bn BP has earmarked for one of the civil cases for the oil spill, the fines could instead reach $17.6bn. It is appealing the court’s decision.

Harley says the M&G Recovery fund is “firmly entrenched” in the bottom decile.

“We believe investors’ patience in expectation of a turnaround has been tested long enough and downgrade the fund to a one-star sell,” he explains.

“Investors may wish to consider Liontrust Special Situations or JO Hambro UK Dynamic as alternative investments.”

The M&G Recovery fund has returned 22.2 per cent over the three years to 19 September, according to FE Analytics. It has lost 1.5 per cent in the past year.

The IMA UK All Companies sector has made 52.3 per cent in the past three years and 6.3 per cent last year.