Spot the Dog: M&G finally escapes the dog house

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A long stay of the controversial Spot the Dog report, which names and shames underachieving investment funds, has been removed from the list, while Aberdeen Asset Management remains a prominent giant within the list.

The M&G Recovery fund is among three funds from the investment giant that has seen the funds removed from the list. For four consecutive reports M&G had the largest amount of assets named and shamed in the list.

The M&G Global Basics and M&G Global Dividend fund have also escaped the most recent Spot the Dog report.

Schroders has the most assets represented in the list, through the inclusion of one major fund, the £1.2bn UK Mid 250 fund run by high profile manager Andy Brough.

A Schroders spokeswoman says: “Our funds are managed for long term performance to assist our clients in meeting their future financial goals. During this time we recognise that there will be periods of short-term underperformance.”

Schroders attributes the underperformance over the last 12 months to the post EU referedum period since the fund has a large exposure to domestic stocks, however “these are now recovering quickly” with improving earnings and dividends.

Overall in the Spot the Dog report 42 retail investment funds are “seriously underachieving” representing total assets of £8.6bn, the report says. Total assets underachieving are less than half what they were six months ago.

Funds that feature in the report have failed to beat their relevant benchmark over three consecutive 12-month periods and also by 5 per cent or more over the full three-year period. The report only analyses commission-free share classes.

“While fund management companies like to push their star managers and the funds that happen to be doing well at the time, the reality is many of them will have skeletons in the closet that don’t get mentioned in advertising campaigns,” says Tilney managing director Jason Hollands.

Aberdeen, which this week reported its fund outflows showed no sign of abating, has four funds that feature in the report, but this is still down from 11 a year ago.

Fidelity and Columbia Threadneedle also feature prominently in the list. Fidelity’s £958 million American and £101 million Japan funds are back in the kennel, while the Threadneedle Japan fund and the Threadneedle Global Emerging Markets Equity fund both also feature.

Hollands says it’s a “simple fact” that many funds fail to beat their benchmarks after fees have been taken and says investors need to keep a “beady eye” on investment managers.

“Surprisingly, many continue to put up with weak or pedestrian performance and it’s the fund management companies that benefit. This suffering in silence can be a result of investors not reviewing their investments, a lack of ongoing advice or simply inertia and disinterest.”

When it comes to sectors, global funds featured 15 times in the list, followed by North America, which has nine, representing 17 per cent of the universe.