Pension: Jordan Gillies share tips on planning and investing
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The latest controversial Spot the Dog report, from investment platform Bestinvest, calls out 77 investment funds that have consistently underperformed lately. It features some of the investment world’s biggest names, including HBOS, Scottish Widows, St. James’s Place, Fidelity and ABRDN (formerly called Aberdeen Standard). Do you hold any in your Stocks and Shares Isa or pension?
Investors are being asked to check whether they have invested in any of the funds on the list, as they may belong in the doghouse rather than your portfolio.
HBOS, owned by Lloyds Banking Group, heads the hall of shame. Five of its funds, holding a massive £6.85billion of investors’ money in total, have underperformed.
Invesco is the UK’s second worst performing fund manager, down from last year’s worst. It has three funds, holding £5 billion in total, on Bestinvest’s list of investment fund howlers. The direction of travel is improving following a shake-up at the group, but Invesco still has some way to go.
Other notable strugglers include asset managers St James’s Place, with £3.92 billion across four funds, and Scottish Widows, with £2.73 billion across four funds.
Some fund managers just aren’t up to the job (Image: Getty)
The Spot the Dog report has been called “the guide fund managers would love to ban”, because it has shone the light on poor investment fund value for 25 years.
Anybody who invests in a personal pension or Stocks and Shares Isa should check whether their investment funds feature.
If so, decide check whether recent poor performance is just a blip, or terminal. If the latter, consider moving your money elsewhere.
To feature on the list, an investment fund must have underperformed the market it invests in for each of the last three years.
That way the report highlights consistent underachievers, rather than those that have had a short run of bad luck.
Funds must also have underperformed their market by more than five percent over the entire three-year period under review.
The two worst funds in this edition of Spot the Dog have trailed by a staggering 49 percent. So which funds have made the list?
If you own any of the following UK-focused funds, you should have paws for thought as they have underperformed: Jupiter UK Growth, Invesco UK Equity High Income, Invesco UK Equity Income, BMO UK Mid-Cap and HSBC UK Growth & Income.
The US has been a happy hunting ground for Stocks and Shares Isa investors lately, but those who hold GAM North American Growth, Aviva Investors US Equity Income and Invesco US Equity will be holding their noses.
These three are the worst performers in the North American market.
In Europe, Schroder European Alpha Income, Allianz European Equity Income and VT Argonaut European Alpha are the three worst performers over the last three years.
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If this is your fund manager, your money may be better with someone else (Image: Getty)
Bestinvest managing director Jason Hollands said global stock markets have rebounded strongly since last year’s coronavirus crash. “They have delivered impressive returns buoyed by ultra-low interest rates, massive stimulus programmes and optimism fuelled by the roll-out of vaccines.”
As a result, even underperformers may appear to have delivered good returns, but don’t be fooled. You would have made more in better performing funds.
Incredibly, 21 of the funds in the Spot the Dog report delivered actual losses over the last three years, when share prices soared generally, Hollands said. “They represent poor value for money given the fees investors have paid.”
Hollands said do not assume your investments are doing okay, just because they have risen in value lately. “Check how they are doing against the overall market. While it might pay to be patient with a poor performer, in other cases the right course of action could be to switch to a fund with a more convincing track record.”
Bestinvest has been regularly identifying the most consistently poor performing investment funds since the mid-1990s, and the full list can be found on its website, so check whether your pension or Stocks and Shares Isa contains any howlers.