Spot the fund dogs


Spot the fund dogs

Roll up, roll up – it's that time of year again!

March 22, 2024

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It’s that time of the year again. Bestinvest has released their ‘Spot the dog’ report which gives a snapshot performance, or more notably underperformance, of how equity funds have performed against their relevant benchmarks.

On the subject of benchmarks, while everyone is caught up in the current rally in the US, it is important to remember that between 31st December 2021 and 31st December 2023, the S&P 500 made a surprising return of a little less than 0.08%.

Despite all the hype, this is the total move in the index between those 2 dates: 4766.2 – 4,769.83.

This means that if you had invested £100,000 in an S&P 500 tracker for the last 2 years, you would have made £80.

For over a quarter of a century, Bestinvest has been naming and shaming underperforming funds. Here is how they do it:

They analyse UK domiciled and regulated investment companies that invest predominantly in equities. Only funds open to retail investors are considered which strips out hedge funds.

Dog Funds are identified using 2 filters.

1.       First, they filter the fund universe to identify those that have failed to beat the benchmark over three consecutive 12-month periods. Any fund manager can have a poor run but this filter highlights those funds that have consistently underperformed.

By itself, this would generate a huge list, including all index trackers as they would naturally fall below their relative index after costs. Therefore, the second filter is applied.

2.       The fund must have underperformed the benchmark by 5% or more over the entire 3-year period.This means they have not only underperformed, but significantly so, and over the full 3 years. This is not just a blip, this is just bad.


Modern investors are starting to take notice. Gone are the days when investors just handed money over to their wealth manager without asking questions.

You’ve earned that money, you deserve to know what it’s doing. Unfortunately, here is what a lot of it is doing:

In the most recent edition, 151 equity funds holding £95.26 billion of your money are in the doghouse. This represents a 170% jump on the 56 funds feature in the previous edition in the summer of 2023.


Fund groups in the doghouse


St James’s Place

This will come as no surprise. St James’s Place has 3funds on the list, which is actually a slight improvement. Unfortunately, theamount of assets it holds in these dog funds is £18.5 billion.



Terry Smith, CEO and fund manager at Fundsmiths has a devoted following. One of the reasons for poor performance here is that the fund has no exposure to energy, the best-performing sector over the last three years. Neither is the fund heavily invested in technology companies.


Columbia Threadneedle

Columbia has 9 funds in the latest report with the total amount of assets held in them hitting £3.34 billion.


Fidelity International

Fidelity has 7 funds on the list, holding £6.78 billion of assets. As with several on the list, a lack of mega cap tech has meant the funds have missed out on a majority of gains.


HBOS/Schroders/Scottish Widows

Seasoned dog fans will have seen regular appearances from HBOS and Scottish Widows, both part of Lloyds Banking Group, which are managed by Schroders.

In this edition, there were 3 funds from the collective.

Schroders itself also still has some issues with its European fund which is on the list again. The UK Smaller Companies fund, Sustainable UK Equity and Emerging Markets funds also underperformed with the four funds holding £1.26 billion of client assets between them.


Top 10 Biggest Beasts by Size

Global Dogs

Very few managers managed to successfully navigate the last few years successfully. The reopening after the pandemic, the start of the war in Ukraine, cost of living crises caused by rapid inflation and the subsequent rise of interest rates.

The result was that an astonishing 49 funds have made the dog list in the global equity sector. This represents £61 billion of client capital. This includes £23.4 billion in Fundsmith Equity fund and £11 billion St James’s Place Global Quality fund.

UK All Companies Dogs

The main winners among the large cap companies in 2023 were Rolls Royce, M&S and British Gas owner Centrica. It has been a market without dominant themes, where the fundamentals for individual companies have often been overlooked.

A whopping 18% of UK All companies funds met the Dog requirement, comprising 8% of assets under management.

These appeared from all parts of the market. There were growth funds – SVM UK Growth, Premier Miton UK Growth and AXA Framlington UK Select – as well as value funds such as M&G Recovery. Many of them lost out on gains in energy as they tried to include a sustainability focus.

The largest and most notable fund on the list was the £3.9 billion Lindsell Train UK Equity fund.

While naming and shaming by Bestinvest is great to keep fund managers on their toes, we do appreciate that stock picking is a very difficult game. Nobody will get it right all the time, but over the 3 years, to be consistently underperforming, it’s worth making a note and having a rethink about strategy.

Investments are becoming more and more transparent therefore investors who expect more, can now see whether they are getting it.

At TPP we strongly believe in transparency, cost efficiency and ultimately giving good returns for a sensible price. To consistently perform is not an easy thing to do, but beating the relative benchmarks should be, and that is our goal.

For more information, please do contact us at support@tppglobal.io

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