Bestinvest



NEWS RELEASE Embargoed until 7:00am on 30 August 2011Mayfair, LondonBestinvest’s Spot the Dog report reveals ?23.16 billion of retail investors’ money is now invested in underperforming “dog” funds. Bestinvest, the investment adviser, today announces the latest results from its Spot the Dog report, which outlines the worst performing or ‘dog’ funds in nine key investment sectors. The study, which is compiled biannually by Bestinvest’s dedicated research team, reveals that ?23.16 billion of UK investors’ money is sitting in dog funds in nine sectors. This is a staggering rise of 74% since the last report was published in November 2010. Despite stock markets trading within a fairly narrow range between November of 2010 and the end of June 2011, the number of dog funds has risen from 90 to 94. IMA global sector funds were among the worst performers with 27 dog funds identified – up from only 11 in 2010. The report highlights that investors have paid ?348 million in annual management charges over the last 12 months for the privilege of having their funds managed by the industry’s worst performers. Taken over the three years upon which the report is based, this equates to well over ?1 billion in charges for dog funds in the nine major equity fund sectors. The worst five fund management groups by ‘dog assets under management’ are:Fidelity (?3.4 bn) – Fidelity has not featured in Spot the Dog for several years, but returns this year, topping the dog list. The main culprit is Fidelity European, managed by Sam Morse, which has ?3.14 billion of assets under management. Along with the once reputable Fidelity American Special Situations Fund, this means that 22%* of Fidelity’s funds by value are now in dog funds. Newton (?2.1 bn) – Newton appears second on the list with the Newton International Growth Fund, at over ?1.3 billion, accounting for over half its total of dog funds. The remainder is accounted for by its other global sector fund offering, Newton Global Opportunities, and both of its current European fund offerings. This means that 19%* of Newton’s funds under management by value are dogs.BlackRock (?2 bn) – Makes a surprise appearance among the industry’s leading dog managers, thanks to the recent performance of its two main UK equity fund offerings, BlackRock UK Dynamic and Blackrock UK. Both are managed by Mark Lyttleton who rose to prominence in 2008. Lyttleton performed well enough prior to the financial crisis but his UK funds have since fallen off a cliff. They are close to being the very worst performers of all the 94 dog funds in this year’s report. 29%* of BlackRock’s funds by value are now classed as dogs. Schroders (?1.7 bn) – Schroder moves from third to fourth place in the latest report. Schroder UK Mid 250 is still the main culprit with ?1.6 billion under management making this the fourth consecutive dog listing for manager Andy Brough. This time around, Schroder Global Climate Change also joins the dogs, taking total dog assets to ?1.67 billion, up from ?1.53 billion last time. Judging by the size of Schroder UK Mid 250 the message has been slow to reach investors. Bestinvest downgraded the fund as long ago as 2008 and it has not left the dog house since.Scottish Widows/SWIP (?1.5 bn) – The worst repeat offender in the fund management industry this time drops from second place to fifth with a significant reduction in the ?2.1 billion of dog funds under management in our last report. Indeed, the actual number of dog funds has dropped to seven – the lowest for several years. However, the company still has well over a quarter of its asset, 27%*, in the dog house. Europe and emerging markets continue to be the main difficulty with two substantial funds in each sector, however, the Scottish Widows Global Select Growth Fund and the Scottish Widows International Managed Fund are also now among the worst of their breed.*Of all funds that qualify to appear in the ‘dog universe’ as defined by Bestinvest. The universe excludes funds that don’t have three-year track records, fixed interest, property, absolute return and several specialist sectors such as ‘fund of funds’, or where full data is not available. We also exclude Insurance, Offshore, Institutional and Pension ments from Adrian Lowcock, senior investment adviser at Bestinvest, says:“The overall value of assets invested in dog funds has taken a shocking leap, rising over 74% to more than ?23 billion. Once again it’s clear that the industry has little appetite to address abject underperformance and that too few investors are willing to vote with their feet. Until they do,” he says, “it’s doubtful whether fund managers will ever be sufficiently motivated to clear up after their dogs.“With stock markets in turmoil, fund managers can no longer rely on rising markets to hide lousy performance. Meanwhile, investors simply can’t afford to leave their precious savings languishing in dog funds. Now is the time for them to take action. Hopefully, our report will be a wake up call for investors. It’s never been more important for investors to take a close look at who is supposed to be managing their funds to make sure that their money is working as hard as possible for them.”NOTE: Members of the public who wish to see a copy of the report should visit bestinvest.co.uk/dogs or call 020 7189 2461.…ends…Notes for EditorsFor more information, to arrange an interview or photograph, contact:Victoria SheridanAdrian LowcockRostrum CommunicationsBestinvest (+44) (0)207 440 8678020 7189 990807795 656 06907989 661 935victoria@ Adrian.lowcock@bestinvest.co.ukWhat makes a fund a ‘dog’?Bestinvest reviews UK registered, open-ended retail funds (ie unit trusts & OEICs). To qualify as a dog, a fund has to:Underperform its benchmark in each of the last three years Underperform its benchmark by at least 10% over the past three years cumulatively (this weeds out tracker funds) About Bestinvest:Bestinvest looks after over ?4 billion of assets for its clients. It was founded 25 years ago and is backed by 3i. It offers a range of investment services from our online execution only service, Select, to investment advisory to investment management, as well as financial planning and tax efficient investment services. It won the 2011 Money Marketing award for ‘Best Investment Manager’ and the 2010 award for ‘Best Investment Adviser.’ Recently it has been voted the Investors Chronicle and Financial Times ‘UK Wealth Manager of The Year’ and ‘Best Wealth Manager for Investments’. Headquartered in Mayfair, London, Bestinvest has 20 regional offices with 200 staff. ................
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