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Invesco tops dog funds hall of shame ahead of Jupiter and SJP


Invesco has dominated Tilney Bestinvest’s Spot the Dog list of underperforming funds for the sixth consecutive time, with wealth giant St James’s Place and Jupiter also featuring prominently.

A total of 119 funds running almost £50bn made the twice-yearly list, which screens retail funds to identify those which have consistently underperformed by at least 5% in each of the last three years.

That was slightly lower than the record 150 funds, with £54.4bn of assets, six months ago, but still 31% above the 91 listed a year ago.

‘The drop in assets reflects a number of UK funds in particular escaping the kennel in the latter part of 2020 as positive news about coronavirus vaccines fuelled a sharp recovery in some of the hardest hit parts of the market,’ the report said.

Invesco claimed top spot in the doghouse both by number of funds and the value of the assets held in them, with £9.2bn across 11 underperforming portfolios. 

These included the Invesco UK Income and High Income funds, previously managed by Mark Barnett, who left the group in May after a torrid few years of poor performance. Barnett had taken over the funds from Neil Woodford in 2014.

The two funds, now run by James Goldstone and Ciaran Mallon, were down -25.3% and -27.4%, respectively, versus a sector average of 8.1% over three years.

Many of Invesco’s other doghouse entries have now also been handed to new managers as part of a major shake up, so the firm may be spared further embarrassment in the survey’s next edition. 

Meanwhile, Jupiter leapt up the rankings from ninth to second place, courtesy of two large funds it took over through its acquisition of Merian last year.

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Jupiter has eight funds in the doghouse running £4.1bn combined, with more than half of that accounted for by the £1.9bn Merian North American Equity and £892m Merian Global Equity funds.

Over three years they returned 33.8% and 22.3% versus sector averages of 36.5% and 23.7% respectively. 

In the doghouse

Group Number of dogs  Value of dogs (£m)  Previous ranking
Invesco 11 9,234.91 1
St James’s Place 4 4,051.00 2
Schroders 11 3,969.95 5
JPMorgan 1 3,180.02 45
Scottish Widows Schroder 1 3,167.85 N/A
M&G 5 3,141.08 5
Dimensional 3 2,837.69 7
Hargreaves Lansdown 1 2,117.12 10
Aberdeen Standard Investments  8 2,025.71 12

The list also includes serial underperformers the £514m Jupiter UK Growth fund, which has more than halved in size since 2018, and the £35m Jupiter Growth & Income.

Jupiter is in the process of carrying out a reshuffle of its investment managers and has been closing and merging funds.

SJP, which outsources the managemet of its in-house funds to third-party asset managers, sits third in the hall of shame with four funds, running a combined £4bn.

The number of dogs housed in Tilney Bestinvest’s kennel has halved since the previous edition of the survey however, as three UK income funds – including the SJP UK High Income, previously managed by Woodford – improved.

Among the remaining poor performers is the SJP Global Smaller Companies fund managed by Kevin Beck, which over the three years was down 0.5% against an average that returned 5.6%.

Elsewhere, JP Morgan also made an appearance on the list due to its £3.2bn US Equity Income fund, which delivered poor relative returns after being heavily underweight the growth tech stocks that drove the coronavirus recovery rally.

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Other funds in the list include the £103m BlackRock Global Equity, Nick Kirrage’s £230m Schroder Global Equity Income and the £82m Liontrust’s European Opportunities fund, managed by Citywire AA-rated Thomas Smith. 

The sectors with the highest proportion of dog funds were global equity income (39%), North America (28%) and global equities (22%).

‘This is perhaps unsurprising given the sharp outperformance of US technology and online stocks in recent times. Funds that have not been fully exposed to these types of businesses – including those that seek income or target undervalued companies – have therefore significantly underperformed,’ the report said.

‘It is noticeable once again how few smaller companies funds made it onto our dog list, suggesting fund managers do a better job in less-researched parts of the market.’

 



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