M&G tops Spot the Dog list with £11.9bn in underperforming funds

Bestinvest spot the dog 07/14M&G has dominated assets in the Spot the Dog list, having £11.9bn in underperforming funds and the three largest funds on the Tilney Bestinvest list.

The £5.5bn M&G Global Dividend fund topped the list of underperforming funds by assets, followed by the £3.4bn M&G Recovery and £1.8bn M&G Global Basics funds.

In total M&G accounts for 60 per cent of the £18bn assets sitting in underperforming funds, with five funds on the list.

Aberdeen Asset Management comes in second, with £2.1bn in assets between six funds on the list. However, this improves on the last list when it had 11 funds.

The £1.2bn Aberdeen Asia Pacific Equity fund accounts for the bulk of the manager’s underperforming assets, with Tilney Bestinvest saying the fund has “fallen on hard times”. The St. James’s Place Far East fund has also hit the list, in fourth position, which is run by Aberdeen. It has recently replaced Hugh Young as manager on the fund.

“The group is currently going through some regrouping as senior, and well-respected, fund managers are changing roles internally – we will have to see if this leads to a turnaround,” states the report.

Invesco Perpetual is a newcomer to the list, with its £764m Invesco Perpetual Global Equity Income fund taking a spot, following a change of manager in 2012.

The list identifies the funds that failed to beat their benchmark over three consecutive 12-month periods, with the fund having underperformed by 10 per cent or more over the three-year period.

Graham Mason, chief investment officer for equities, multi-asset and retail fixed income at M&G Investments, says: “We are disappointed to be included in the report and acknowledge the challenging performance some of the funds have experienced. We have been addressing this and the performance of these funds this year is encouraging.”

He adds that while the Global Dividend fund faced underperformance in 2014 and 2015, it has bounced back in the year so far. M&G has also appointed a new fund manager on the M&G Global Basics fund.

“Though the short term is more positive, M&G’s funds are managed for long term performance and we always encourage investors to take a similarly long-term view when investing, as we believe best returns come with patience. We have learned over many years the importance of not changing our investment strategies to suit short-term trends and influences,” he adds.

The total number of funds on the list dropped in the past six months from 54 to 30 funds, but the assets remained the same at £18bn.

Asset managers that were absent from the report are Aviva Investors, Axa, Artemis, Baillie Gifford, Baring, BlackRock, BMO Global, First State, JO Hambro Capital Management, JP Morgan, Liontrust, Man GLG, Royal London and Standard Life.

This time Tilney Bestinvest analysed the lower cost, commission-free versions of funds, as it is now three years since the removal of commission. It says that this means many disappointing funds narrowly missed inclusion.

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