Two filters are applied before a fund is given a “dog” tag. Each fund needs to have failed to beat its benchmark every year for the past three, while over the combined three-year period the fund must have underperformed by 10pc or more. This strips out the funds that have “simply had a short run of bad luck”.
Jason Hollands of Bestinvest said: “Many investors end up with poor performers because they don’t monitor their investments regularly, or get poor service from the adviser who recommended the fund. These funds have proven popular in the past and their being on the dog list should raise eyebrows.”
The M&G Recovery fund has turned £10,000 into £11,300 over three years. Savers who instead bought a “tracker” fund that mirrors the FTSE All Share index would today have £12,900. Mr Nimmo’s fund has fared better, rising by 27pc to turn £10,000 into £12,700, but the benchmark it is supposed to beat – the “FTSE Small Cap ex Investment Trust” index – has risen by 52pc.
In total 49 funds are given the “dog” tag. M&G, Schroders and Neptune are named as the biggest culprits, with three ‘dog’ funds each in the list.
The report highlighted that global funds were the worst performers, with 20 funds named and shamed. At the bottom of the league table is PFS Taube Global, followed by M&G Global Basics and Neptune Global Special Situations.
A spokesman for M&G said: “We recognise the performance has been challenged over the short term. However, these funds are managed for long-term performance.”
A spokesman for Standard Life Investments said: “The recent market environment has been difficult for the fund as investors have responded to better economic data by rotating out of quality growth stocks and into more economically sensitive cyclical companies.”
kyle.caldwell@telegraph.co.uk
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