M&G Investments’ Alex Odd has entered Bestinvest's infamous list of “dog funds”, alongside offerings from Standard Life and SWIP, after his £1.2bn M&G Dividend fund underperformed its benchmark substanitally.
The wealth manager, releasing its latest Spot the Dog list, said the fund posted a loss of 14% relative to its benchmark over the last three years.
Odd took over the vehicle eighteen months ago, with Bestinvest labelling his performance since taking the helm as ‘paw'. The fund is the largest equity income fund to be placed in the dog house.
Standard Life Investments' Karen Robertson, who heads up the group's £710m UK Equity Higher Income fund, is also a new entrant.
Bestinvest highlighted the cyclical emphasis of the portfolio has hurt performance, particularly in the second half of last year when markets corrected.
Robertson's fund has also been placed in a number of similar lists recently, following a downturn in returns.
Over the last three years the fund has posted a decline of 12%, added Bestinvest, well below peers and the benchmark.
Looking for positives, the report reveals retail investor money in underperforming funds has fallen by £13.8bn to £9.2bn from its last report in August.
However, it put the fall down to the timing of the report, with the downturn seen in the last six months of 2008 falling out of scope, and renewed volatility recently meaning many funds have not underperformed their benchmarks significantly.
Overall the number of ‘dog' funds stands at 44, down from 94, with the North America and Global Emerging Markets sectors having no funds in the dog house.
SWIP is the worst offender overall by assets under management, with £2.3bn in poorly performing funds including the SWIP UK Income, Scottish Widows UK Growth, and Scottish Widows UK Equity High Income funds.
M&G sits in second place thanks to Odd's fund, with Schroders, Standard Life and St James Place making up the rest of the top five.
Adrian Lowcock, senior investment adviser at Bestinvest, said both Odd and Robertson have consistently provided disappointing returns to investors over the periods analysed by the report.
"Odd took on the fund 18 months ago and still appears to have his work cut out if he is to get this hound ahead of the pack," said Lowcock.
"Meanwhile Robertson, once renowned for consistency of performance, has seen her stock-picking skills wane in recent years.
"During 2011 she was guilty of too pro-cyclical a view as markets corrected into the second half, which is an affliction that several of Standard Life's UK equity funds were culpable of during the same year."
The independent investment manager's biannual Spot the Dog report assesses the 2,290 unit trusts and Oeics that make up the IMA sectors, excluding fund of funds, multi-managers and multi-asset funds.
The worst performers - funds that not only underperform their benchmarks in each of the last three years but also underperform by a cumulative 10% over the same period - are featured in the list.
"The overall value of assets invested in dog funds has fallen from its high in 2011 but there are still some managers who have not woken up to the new market conditions, as there are 108 funds in the universe which have underperformed their benchmark by excess of 10% over the last three years," added Lowcock.
Audio / Visual
This year we celebrate the fifth annual PPR Structured Product Awards. The 13 awards are divided into two, covering the products delivered to market over the past year and the support services that are also essential to the market. All the awards are designed to highlight not just the winners but the strengths and capabilities of the range of providers in this highly innovative market.
Job of the week