Spot the Dog The guide fund managers would love to ban - Best Price Financial Services
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2019 | Volume 1
Spot the Dog
The guide fund
managers would
love to ban
Spot the Dog 2
Contents
Welcome.............................................................. . 3
In this edition of Spot the Dog ............................ 4
How we identify dog funds ................................. 5
Should you switch out of a fund if it’s a dog? …. 6
How to read the data .......................................... 7
Fund groups in the doghouse .............................. 9
UK All Companies dogs ................................. 10
UK Equity Income dogs ............................... 12
UK Smaller Companies dogs…....................... 14
North American dogs ..................................... 15
European dogs ............................................... 16
Asia Pacific dogs ............................................ 18
Global Emerging Markets dogs ..................... 19
Global dogs ..................................................... 20
Is it time to take a hard look at all of your
investments? ................................. 22
Important information
Please note that Spot the Dog is intended purely as a representation of statistical data. The value of investments, and any income
derived from them, can go down as well as up and you may get back less than you originally invested. Prevailing tax rates and relief
are dependent on your individual circumstances and are subject to change. If you are unsure about the suitability of any investment,
you should seek professional advice. Past performance is not a guide to future performance. Please note we do not provide tax advice.
Spot the Dog 3 Spot the Dog 3
Welcome
Welcome to Spot the Dog – the infamous report that names and shames
underperforming funds. Over the next pages you will find a collection of
funds from different sectors that analysts have identified as behaving
particularly badly over a consistent period of time, as well as pedigree pick
alternatives that could be better options for your money.
For more than 20 years awareness has been raised But, surprisingly, many investors continue to put up
of poor fund performance and you will now hear with bad or pedestrian performance. This could be
the term ‘dog fund’ throughout the investment because they fail to check their investments
industry. Spot the Dog doesn’t win any popularity regularly, they don’t receive any ongoing information
awards with fund managers, who bark excuses from the adviser who originally recommended the
when their funds are placed in the kennel. investment, or they simply aren’t interested.
However, it is important that pressure is put on
Spot the Dog’s message is simple. It’s important to do
them to address the problems.
your research when choosing your funds and equally
Since the global financial crisis low interest rates and important to review them over time. Just because a
Central bank money printing have pushed share fund is performing well today, doesn’t mean it won’t
prices higher, boosting the value of most stock start howling in the future.
market funds. This has helped to disguise some bad
decisions from fund managers. But as interest rates
are now increasing and Central banks have started
to unwind these programmes, the actions of fund
managers could make a big difference to investors’
returns – including whether they make a profit or a
loss. This means it is now more important than ever
to be selective when choosing a fund manager to
look after your money.
Equally important is the need to
review your investments
regularly. When funds are
performing well, their managers
are shown off like rock stars of
the City. And yet some of these
stars spectacularly crash out of
orbit, while others simply
fail to beat their benchmarks
over the long term.
4 Spot the Dog
In this edition of Spot the Dog
• In this edition of Spot the Dog 111 funds • On a more positive note, it’s good to see that Aberdeen
have been identified that meet our dog fund Standard Life – which has featured prominently in the guide
criteria. This is a big increase on the 58 that in recent years, at one time having 11 funds – has just 4 dogs
featured in our last edition and is over four this time.
times the number of dogs that we caught this
time last year! • UK Equities has taken over from its global equivalent as the
sector with the most dog funds. We found no less than 59 UK
• The amount of money languishing in dog funds
dogs comprising £35.9 billion of assets when we crunched the
has also risen to the highest level we have ever
numbers. To make things easier for you we have therefore
recorded. We have found a whopping £54.6
decided to split our UK dogs into three kennels – UK All
billion of dog fund assets in this edition, up from
Companies, UK Equity Income and UK Smaller Companies.
£33.6 billion last time. Of course, this is to be
expected when the number of dog funds has • We are pleased to see that last edition’s pair of Japanese
risen so dramatically, but it can also be attributed pooches have finally escaped. However, their empty kennel
to the inclusion of some Great Dane sized new has unfortunately been filled by the return of five new Global
entrants. These include the £4.9 billion Woodford Emerging Market dogs.
Equity Income fund, the £3.9 billion Artemis
Global Income fund and the £1.94 billion • And of course, we must give credit where credit’s due. A
Threadneedle UK fund. number of fund management companies have avoided the
kennel altogether this time. Those that deserve a treat
• While many of the funds in Spot the Dog are include Baillie Gifford, Baring, Evenlode, First State,
small in size, with the median being just £173 Fundsmith, Investec, JO Hambro, Lazard, Lindsell Train, Man
million, this edition includes 14 big beasts each GLG, Marlborough, River & Mercantile and Stewart Investors.
holding over £1 billion of assets.
• Several of these come from Invesco. This repeat
offender has been crowned top dog for the
second edition in a row, with a total of £13 billion
of assets spread across 7 dog funds. In second
place is new entrant Woodford Investment
Management. This household name finds itself in
runners up position thanks to the sheer size of
the company’s flagship equity income fund –
although they also manage the St. James’s Place
UK High Income fund, a £1.6 billion beast that is
currently top dog in the UK Equity Income
kennel.
In the interests
of fairness…
Eagle-eyed investors may notice
that two of the funds in this
guide also feature in the Top-
rated Funds. These are Artemis
Global Income and MI Somerset
Emerging Markets Dividend
Growth. As a reminder, Spot the
Dog isn’t a list of funds that you
should sell automatically – it’s a
statistical analysis of how funds
have performed over the last
three years. And while these two
funds have underperformed the
markets over the last three
years, it is still believed that they
can deliver for investors over the
long term.
Spot the Dog 5
How dog funds are identified
The dog ratings are based solely on statistical criteria relating to a
fund’s past performance. Here the methodology is explained.
Over the last couple of decades, the fund
Establishing a benchmark
management industry has become increasingly To assess the performance of a fund, it needs
competitive. Markets trade globally around the to be compare with a suitable benchmark. In most
clock, information is available within seconds and cases this will be an index that represents the
large companies in particular are analysed in detail overall movements in the market that the fund
by scores of analysts at banks, brokers and fund operates in. For example, for most UK equity
managers all of whom are trying to find an edge. It funds the comparison will be against the MSCI
is unsurprising then that fund managers need to be United Kingdom All Cap index but for more
really good just to be average. If you are going to specialist funds, such as those that focus on
invest in actively managed funds, you need to be smaller companies, a more appropriate index is
very selective in choosing those managers with the allocated. The focus is to try to identify whether
skill to deliver superior returns that justify their the performance of the fund, after charges, has
fees. Most fund managers do not achieve this over added or detracted from the returns delivered by
the long term. general movements in the benchmark. Every fund
group allocates a benchmark to each of their
Spot the Dog is focused on identifying those funds funds; this is usually a market index but
that warrant special attention because they have sometimes a peer group of competitor funds or a
performed particularly badly compared to their measure such as a target return above inflation or
benchmark over a reasonable time period and interest rates is used. Where possible a fund’s
consistently so. performance will be compared against a market
benchmark rather than the average performance
of funds in a sector, which may differ from the
Our universe fund’s factsheet.
This document analyses UK domiciled and
regulated open ended investment companies
OEICs) and unit trusts that invest predominantly in
Definition of a dog fund
equities as this is where the greatest differentials Two filters are applied to identify dog funds. Firstly,
in performance between funds occur. the fund universe is filtered to identify those that
have failed to beat the benchmark over three
The document only considers funds that have consecutive 12-month periods. This filter is used to
share classes that are open to retail investors, highlight those funds that have consistently
stripping out those only accessible to institutional underperformed and to strip out those that may
investors simply have had a short run of bad luck. However, if
this was the only filter it would generate a huge list
Investment trusts or investment companies are of funds including all index trackers as these are
not included as their share price performance may bound to regularly underperform, at least slightly,
not reflect the net asset value performance delivered due to their charges, which the index does not
by the fund manager due to discounts or premiums. have. A second filter is therefore applied: the fund
must have underperformed the benchmark by 5%
or more over the entire three-year period of
analysis.
6 Spot the Dog
Should you switch out
of a fund if it is a dog?
There are many reasons why funds go through periods of poor performance.
Deciding whether to stay invested or switch is all about assessing its future
prospects and whether you might be able to do better elsewhere.
It is important to stress that Spot the Dog is not a list So, Spot the Dog is not a ‘sell’ list. However, funds
of funds that should be sold automatically, as it is that appear in it do require further investigation.
based purely on factual analysis of past performance Unless there are good reasons to believe
which is not necessarily a guide to how a fund will performance will turn around based on an
perform in the future. Indeed, there may be good
assessment of its prospects, it may make sense to
reasons to believe that future prospects are better.
For example, there are many different ways of switch to a pedigree picks fund. Fund managers
investing and some funds have distinctive styles or have been assessed for more than 20 years and
investment approaches that can go through periods proprietary techniques are applied to distinguish the
that are deeply out of step with the current markets top pedigree funds from the mutts. This includes both
but could be about to come back into favour. Some statistical and qualitative analysis and involves
managers are better suited to tougher times, others hundreds of fund manager interviews each year.
to rising markets.
For each sector where dog funds are highlighted, a
It can also be the case that action is underway to comparison is provided with the pedigree picks of a
improve performance. For example, if a new fund research team. However, there is no certainty that
manager with a strong, proven track record funds that meet rigorous criteria today are destined
elsewhere is appointed or a change of investment to outperform in the future.
approach is now being applied to a fund that has
historically underperformed, performance could be
turned around.
Spot the Dog 7
How to read the data
A summary of the sector. The number of
dog funds is expressed as a proportion of the
number of funds in the potential universe
and by their total value Watch dog
Universe Dogs %
…………………………………………………➢ Number of Funds X X X%
…………………………………………………➢ Value of Funds (£mn) £x £x X%
Benchmark
This shows the performance of the benchmark 3 years 5 years
Index over three and five years. When reviewing
The dog funds, they are compared with the three-year xxxxxxxxxx x x
Return of the index with the three-year return on
£100 invested
In the doghouse
3-year Relative 1st 2nd 3rd 4th 5th
return 3-year year year year year year
on return return return return return return
£100 %
X X X X X X X X
Full name of the dog These two columns show the Discrete total return (income reinvested) one-
fund. Funds are listed in performance of the fund over the year performance is shown across these five
order of poor last three years. The second columns. Each figure shows what the value of a
performance (see next column is performance relative to £100 investment made at the start of the period
column) the stated benchmark. The lower would have been at the end of the period, so a
the figure, the worse the fund. figure of less than 100 represents a loss and a
figure above 100 represents a gain. For example,
1st year return is the year to 31 December 2018,
2nd year return is the year to 31 December 2017.
Pedigree picks
3 year Relative 3 1st year 2nd year 3rd year 4th year 5th year
return on year return return return return return return
£100 %
X X X X X X X X
The funds listed in this section are Bestinvest’s current top-rated funds in the sector which have
track records of at least three years. These ratings by our research team are based on both
statistical and qualitative assessment of the current fund management teams and do not
indicate that these funds are the top past performers.
8 Spot the Dog
Spot the Dog 9
Fund groups in the doghouse
Below are exposed the fund houses that are the main culprits in this
edition of Spot the Dog.
Invesco Artemis
It is a shame to see Invesco taking the title of top Artemis is another big name that has climbed the
dog for the second edition in a row. The group has table since last edition – from 9th up to 4th. The
failed to turn its fortunes around, with a massive £13 fund manager’s £4.5 billion of dog fund assets
billion of investors’ money held in 7 underperforming can be attributed to just 2 funds. The first is
funds. One of these is the Invesco High Income fund, Artemis UK Special Situations, which has kept its
a £7.8 billion beast that towers over all other dogs in place from the last edition – although it has lost a
this edition. It is run by UK equity manager Mark few pounds and now sits at around £680 million
Barnett, who has had a torrid time in recent years in size. It is now being kept company by its much
and yet again finds three of his funds featured within bigger cousin, the £3.9 billion Artemis Global
these pages. Income fund. This surprise entrant has performed
well in recent years but has lagged its benchmark
Woodford Investment because, as an income fund, it has less exposure
to the US market where dividend yields are low.
Management
Neil Woodford has enjoyed a mostly successful St. James’s Place
career spanning more than 30 years, most of which A regular name in Spot the Dog, St. James’s Place
was spent at Invesco. He is as close to a household
has seen its number of funds double from 2 to 4
name as you will find in the fund management
since we last ran the numbers. The advice firm owns
industry, and even received a CBE for services to the
economy in 2013. In 2014 he left Invesco to set up its funds but appoints external fund managers from
his own business, initially attracting significant funds the likes of BlackRock and Woodford Investment
from his devoted fans. And yet, the star fund Management, which it argues offers clients “access to
manager now finds himself in the dog house due to fund managers of outstanding ability”. It is worth
the poor performance of his massive £4.9 billion noting that these funds also have some of the
Woodford Equity Income fund. highest ongoing costs of those featured in Spot the
Woodford took a contrarian, more optimistic view of Dog.
the UK economy after the Brexit referendum, The company’s level of dog fund assets has also
increasing his exposure to domestically focused more than doubled since August, up from £1.5
companies. These companies have been out of
billion to £3.84 billion. This big leap is due to the
favour with investors in recent years, and the fund
inclusion of the £1.6 billion UK & International
has also been hurt by a number of stock-specific
blow ups and sizeable outflows from investors. The Income fund, which is managed by Artemis, and
fund now has a substantial exposure to small, illiquid the smaller Global Emerging Markets and Global
companies and holds just 3 of the 100 biggest UK Equity
Group Income funds. These sit alongside repeat
companies. offender UK High Income
This is a very different profile to the funds that All data in this report is sourced from Lipper for Investment Management (31 December 2018)
Woodford managed while at Invesco and may come
as a surprise to some investors. We will be watching
Number Value of Previous Spot
carefully to see if the fund manager can turn his Group of dogs dogs (£mn) the Dog ranking
fortunes around in the future.
Invesco 7 12,999.68 1
Columbia Threadneedle Woodford Investment Management 1 4,977.31 N/A
Columbia Threadneedle has risen from 10th place Columbia Threadneedle 6 4,608.20 10
in the last edition to take the bronze medal this time
Artemis 2 4,592.74 9
around, seeing a whopping £4 billion increase in the
level of assets languishing in their dog funds. The St. James’s Place 4 3,842.10 6
number of dog funds from the manager has also Janus Henderson 8 3,779.99 3
increased from 2 to 6, with some new big beasts
including the £1.94 billion Threadneedle UK fund and Jupiter 7 1,759.24 8
the £1 billion Threadneedle European fund. Schroders 4 1,390.13 15
HSBC Investments 5 1,377.09 7
Hargreaves Lansdown 1 1,261.50 N/A
10 Spot the Dog
UK All Companies dogs
Most UK fund managers have had a tough time in
recent years. A common strategy for beating the Watch dog
index is to look for good small and mid-cap Universe Dogs %
companies which offer greater growth potential and
tend to be under-researched but these
companies have underperformed their larger Number of Funds 173 32 18%
counterparts over the last three years as a result of Value of Funds (£mn) £99,207.95 £27,370.82 28%
the continued uncertainty and liquidity issues.
In contrast, the large multinationals that dominate Benchmark
the top end of the FTSE 100 have performed
3 years 5 years
relatively well. This is partly due to sterling
weakness, which has meant their overseas MSCI United Kingdom All Cap 119.88 120.66
revenues are worth more when converted back
In the doghouse v Pedigree picks
into pounds. As these mega- caps have lifted the
wider stock market, many active managers have
180
been left behind. This is because traditionally they
do not hold big active weightings to these 170
companies, as they don’t see them as adding much 160
value.
150
Total return
Although many people will be disappointed to see 140
Invesco’s Mark Barnett fail to escape the
(%)
130
doghouse, the big story in this edition is the
inclusion of Neil Woodford. Since 2016’s Brexit 120
referendum Woodford has taken a more bullish 110
view of the UK economy than many of his peers.
100
He has reduced his exposure to large-caps in
favour of smaller and domestically focused 90
businesses – which has unfortunately backfired. He 80
hasn’t been helped by his exposure to the financial Dec 13 Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Jun 17 Dec 17 Jun 18 Dec 18
sector and housebuilders either, as both have been TB Evenlode Income MSCI United Kingdom All Cap Jupiter UK Growth
affected by the ongoing uncertainty. The fund’s
Source: Lipper for Investment Management
holdings in unquoted companies were also a drag
on performance.
On top of this, there have been some high-
profile stock-specific issues within his portfolio.
You may have seen Provident Financial in the
news over the last few years – this remains
one of his biggest holdings despite its share
price collapsing after a series of profit
warnings. Another example is Purplebricks, an
estate agent that has seen its share price
deteriorate since 2017 as it tries to conquer the
UK market.
Although we don’t see the investment case for
Woodford changing in the near term, the
manager has had a long and successful career
so we will be watching closely to see if he can
turn his fortunes around.
Important information
The value of investments, and the income derived from them, can go down as well as up and you can get back less than you
originally invested. Past performance should not be considered a reliable indicator of future returns. Different funds carry varying
levels of risk depending on the geographical region and industry sector in which they invest. You should make yourself aware of
these specific risks prior to investing. This guide does not constitute personal advice.Spot the Dog 11
In the doghouse
3 year Relative
return on 3 year 1st year 2nd year 3rd year 4th year 5th year
£100 return % return return return return return
Jupiter UK Growth 86 -28 84.70 108.15 93.59 107.53 107.85
LF Woodford Equity Income 87 -28 83.53 100.79 103.19 116.19 N/A
Invesco UK Strategic Income 92 -23 83.89 108.61 101.12 107.70 110.73
Legg Mason IF QS UK Equity 96 -20 86.96 107.25 103.03 111.27 104.65
Royal London UK Opportunities 96 -20 82.74 110.65 105.06 105.26 101.20
Jupiter UK Alpha 97 -19 83.54 106.65 109.05 103.04 103.29
Invesco High Income 97 -19 89.02 105.38 103.84 110.08 110.46
Invesco Income 97 -19 89.36 105.27 102.88 109.17 109.85
Kames UK Opportunities 97 -19 82.88 110.43 105.82 109.38 101.71
LF Canlife UK Equity 97 -19 88.84 112.34 97.14 105.98 103.26
Artemis UK Special Situations 99 -18 85.67 106.66 108.08 106.04 100.09
Jupiter Growth & Income 99 -18 83.01 109.18 108.89 101.81 100.91
Fidelity MoneyBuilder Growth 99 -17 87.56 106.74 106.40 109.25 102.38
HSBC UK Focus 102 -15 88.89 105.48 108.57 104.33 100.23
Kames UK Equity 103 -14 85.06 111.58 108.53 108.73 102.58
Invesco UK Companies 103 -14 85.14 107.26 113.01 101.31 100.62
Janus Henderson UK Responsible Income 103 -14 89.35 111.05 103.59 109.30 107.60
Jupiter Responsible Income 103 -14 87.49 109.22 107.75 101.62 99.97
Marks & Spencer UK Selection Portfolio 105 -13 88.79 106.93 110.24 102.43 100.21
HSBC UK Growth & Income 104 -13 89.06 108.55 107.31 103.44 101.28
Santander Premium UK Equity 104 -13 87.18 112.53 106.23 107.15 98.68
HSBC UK Freestyle 104 -13 89.15 108.44 107.59 N/A N/A
Scottish Mutual UK Equity 106 -12 86.37 112.57 108.49 103.11 102.35
Fidelity Institutional UK 106 -12 88.05 109.45 109.46 108.79 103.93
Neptune UK Mid Cap* 97 -12 81.39 114.58 104.00 114.31 113.06
Janus Henderson High Alpha UK Equity 110 -8 89.64 111.43 109.93 104.52 106.70
Schroder UK Alpha Plus 110 -8 89.45 109.44 112.73 102.96 99.18
Franklin UK Opportunities 110 -8 89.08 111.67 110.64 105.18 105.69
Invesco UK Growth 111 -7 86.64 111.5 115.38 100.63 101.1
Threadneedle UK 111 -7 88.13 111.25 113.37 106.36 103.60
Barclays UK Alpha 112 -7 89.79 107.57 115.98 100.50 102.46
Threadneedle UK Extended Alpha 112 -6 89.31 111.38 112.88 107.82 105.87
Benchmark: *MSCI United Kingdom Small Cap
Pedigree picks
3 year Relative
return on 3 year 1st year 2nd year 3rd year 4th year 5th year
£100 return % return return return return return
TB Evenlode Income 135 13 100.39 115.18 117.06 108.44 108.23
LF Lindsell Train UK Equity 133 11 98.91 120.66 111.31 111.48 107.25
Liontrust Special Situations 132 10 97.88 116.76 115.77 113.89 101.88
JO Hambro CM UK Dynamic 126 5 89.79 116.15 121.17 100.09 102.92
Jupiter UK Special Situations 124 3 92.67 109.21 122.44 100.18 103.7112 Spot the Dog
UK Equity Income dogs
There was an influx of equity income funds in the Watch
last edition of Spot the Dog, and this trend has dog
Universe Dogs %
continued into 2019. This time 25 badly-
behaved funds identified from the UK Equity Income Number of Funds 72 25 35%
sector – so many that we have had to move these Value of Funds (£mn) £49,234.13 £8,094.85 16%
pooches into their own kennel.
As they aim to pay investors a regular income, lots Benchmark
of equity income funds hold positions in companies 3 years 5 years
that pay consistent dividends. Sectors like financial
services and the tobacco industry have often been MSCI United Kingdom All Cap 119.88 120.66
popular with income managers, but both have
In the doghouse v Pedigree picks
lagged the wider market in recent years. This may
have contributed to the inflated number of equity
160
income dogs in this edition.
Certain equity income funds instead look for small 150
and medium-sized companies, with the hope of
building a growing income stream as these 140
companies get bigger. However, these funds have
130
Total return
also faced challenges as smaller, more domestically
focused companies have also struggled to perform
120
(%)
since early 2016 as Brexit- related uncertainties have
weighed on sentiment. 110
In this edition the top spot is taken by repeat
offender St. James’s Place UK High Income. The 100
fund is managed by Neil Woodford, so perhaps this
90
shouldn’t be surprising considering the manager’s
Dec 13 Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Jun 17 Dec 17 Jun 18 Dec 18
underperformance in recent years. Other mutts that
have failed to escape the kennel in the last six
Jupiter Income Trust MSCI United Kingdom All Cap
months include Smith & Williamson UK Equity
St. James’s Place UK High Income
Income and Castlefield B.E.S.T. Sustainable Source: Lipper for Investment Management
Income. These are joined by a number of new
entrants from the likes of Barclays, Liontrust and
Hargreaves Lansdown.
Important information
The value of investments, and the income derived from them, can go down as well as up and you can get back less than you originally
invested. Past performance should not be considered a reliable indicator of future returns. Funds may carry different levels of risk
depending on the industry sector(s) in which they invest. You should ensure that you understand the nature of any fund before you
invest in it. This guide does not constitute personal advice.Spot
Spotthe
theDog
Dog13
13
In the doghouse
3 year Relative 1st year 2nd year 3rd year 4th year 5th year
return on 3 year return return return return return
£100 return %
St. James's Place UK High Income 84 -30 80.28 105.66 99.23 107.27 108.91
Smith & Williamson UK Equity Income 93 -23 80.62 107.01 107.58 106.83 102.91
Castlefield B.E.S.T. Sustainable Income 95 -21 88.07 103.91 103.55 107.33 105.98
MGTS Ardevora UK Income Institutional 100 -17 89.77 108.37 102.78 117.24 101.41
Threadneedle UK Monthly Income 101 -16 89.78 104.27 107.40 107.74 106.26
Legal & General UK Equity Income 100 -16 83.95 110.71 107.90 106.35 97.46
Schroder UK Alpha Income 102 -15 84.30 112.51 107.56 105.11 101.99
Premier Income 102 -15 84.58 111.75 108.31 109.97 101.71
HC KB Enterprise Equity Income 102 -15 87.61 109.47 106.23 103.77 103.15
M&G Dividend 102 -15 85.70 109.80 108.26 108.11 101.21
LF Canlife UK Equity Income 102 -15 89.69 108.10 105.49 110.90 103.28
Merian UK Equity Income 102 -15 85.81 112.44 106.16 104.18 105.46
Premier Monthly Income 102 -15 84.42 111.79 108.47 109.14 102.44
Liontrust Macro Equity Income 104 -14 87.94 109.96 107.01 105.55 103.67
Janus Henderson UK Equity Income & Growth 104 -13 87.13 108.79 109.54 102.98 100.71
HSBC Income 104 -13 88.35 108.67 108.04 102.49 101.07
AXA Framlington Blue Chip Equity Income 106 -12 88.52 108.65 109.85 105.60 103.55
Santander Equity Income 105 -12 89.32 111.43 105.48 113.23 105.39
HL Multi Manager Income & Growth 106 -11 89.04 109.97 108.37 107.17 106.36
Kames UK Equity Income 107 -11 87.52 111.82 108.83 110.20 102.10
FP Miton Income 107 -11 89.65 110.47 108.04 111.7 105.06
Barclays UK Equity Income 109 -9 89.24 111.64 109.60 104.95 104.55
Royal Bank Of Scotland Equity Income 109 -9 88.45 111.67 110.04 106.25 101.96
Aviva Investors UK Equity Income 111 -8 89.23 112.23 110.52 106.57 102.85
BMO UK Equity Income 112 -7 88.33 110.75 114.27 102.90 100.70
No unauthorised copying
Pedigree picks
3 year Relative
3 year 1st year 2nd year 3rd year 4th year 5th year
return on return return return return return
£100 return %
Jupiter Income Trust 121 1 92.27 110.09 119.56 102.44 103.86
JO Hambro CM UK Equity Income 120 0 87.03 118.05 116.88 101.05 101.12
Threadneedle UK Equity Income 114 -5 93.58 107.40 113.78 104.45 106.58
No unauthorised copying
Important information
The value of investments, and the income derived from them, can go down as well as up and you can get back less than you originally
invested. Past performance should not be considered a reliable indicator of future returns. Funds may carry different levels of risk
depending on the industry sector(s) in which they invest. You should ensure that you understand the nature of any fund before you
invest in it. This guide does not constitute personal advice.14 Spot the Dog
UK Smaller Companies dogs
Dog funds investing in UK smaller companies have Watch dog
been an endangered species for some time now,
Universe Dogs %
with just two dogs last February and one in August.
Last
year’s lone wolf – Majedie UK Smaller Companies – Number of Funds 45 2 4%
has been joined by the smaller Janus Henderson UK & Value of Funds (£mn) £14,272.19 £478.72
Irish Smaller Companies fund this time around.
3%
Benchmark
3 years 5 years
Numis Smaller Companies Ex ITs 112.37 121.99
In the doghouse v Pedigree picks
190
180
170
160
150
Total return
140
130
(%)
120
110
100
90
80
Dec 13 Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Jun 17 Dec 17 Jun 18 Dec 18
Franklin UK Smaller Companies Numis Smaller Companies (-InvTrust)
Majedie UK Smaller Companies
Source: Lipper for Investment Management
3 year Relative 1st year 2nd year 3rd year 4th year 5th year
return on 3 year return return return return return
£100 return %
In the doghouse
Majedie UK Smaller Companies 97 -13 78.09 116.67 106.11 108.39 94.19
Janus Henderson UK & Irish Smaller Companies* 100 -13 80.35 119.05 104.23 102.83 99.25
Benchmark: *Numis + AIM (Ex Investment Companies) No unauthorised copying
Pedigree picks
3 year Relative 1st year 2nd year 3rd year 4th year 5th year
return on 3 year return return return return return
£100 return %
Franklin UK Smaller Companies 108 -3 84.33 128.46 99.53 125.61 99.65
No unauthorised copying
Important information
The value of investments, and the income derived from them, can g o down as well as up and you can get back less than you
originally invested. Past performance should not be considered a reliable indicator of future returns. Different funds carry they
varying risk depending on the geographical region and industry sector
. in which they invest. You should make yourself aware
of these specific risks prior to investing. Shares in smaller companies can be more volatile and less liquid than those in
larger companies, so funds investing in smaller companies can carry more risk. This guide does not constitute personal
advice.Spot the Dog 15
North American dogs
2018 saw the return of volatility to the US stock Watch dog
market with a sharp slide in the fourth quarter.
Universe Dogs %
Nevertheless, it still finished the year ahead of most
other equity markets and UK-based investors also
saw their returns boosted by a strengthening of the
US dollar. The market’s performance was aided by Number of Funds 60 6 10%
Trump’s tax cuts which enabled US companies to
Value of Funds (£mn) £28,428.30 £1,080.44 4%
buy back their own shares at record levels, driving
big rallies in the technology sector and helping Benchmark
Facebook and Amazon to become US$1 trillion 3 years 5 years
companies. However, ongoing trade tensions with
China and mounting concerns over economic growth S&P 500 150.93 195.49
towards the end of the year saw earlier gains wiped
In the doghouse v Pedigree picks
out by the end of 2018.
The US stock market has long had a reputation for 260
being notoriously difficult for active managers to 250
240
beat, which is why many investors have simply 230
given up and chosen low-cost US tracker funds 220
instead. However, there are signs that the tide may 210
be turning, with more managers now outperforming 200
Total return
190
and a sharp decline in the number of dog funds over
180
the last few editions of this guide. 170
(%)
Once the most populated kennel, there are just six 160
150
bad dogs this time. The pack leader is Standard Life 140
American Equity Unconstrained, a small £96 million 130
fund with big holdings in healthcare, computer 120
software and banks. The fund is joined by five 110
100
others, including familiar face Allianz US Equity. This
90
repeat offender has found itself in the dog house for Dec 13 Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Jun 17 Dec 17 Jun 18 Dec 18
the fourth
Loomis Sayles US Equity Leaders S&P 500
edition in a row.
Standard Life American Equity Unconstrained
Source: Lipper for Investment Management
In the doghouse
3 year Relative
3 year 1st year 2nd year 3rd year 4th year 5th year return
return on
£100 return % return return return return
Standard Life American Equity Unconstrained 125 -17 90.00 107.99 128.76 106.99 123.78
Royal London US Growth 129 -14 89.36 110.29 131.16 103.02 121.75
Franklin US Opportunities* 139 -11 100.74 116.16 119.04 112.01 115.17
Allianz US Equity 138 -8 96.37 109.23 131.44 105.88 119.24
Santander Premium US Equity 141 -7 97.12 109.92 132.02 105.91 119.94
Scottish Widows American Growth 142 -6 98.38 108.44 132.62 103.94 118.67
Benchmark: *MSCI US Large Cap Growth
No unauthorised copying
Pedigree picks
3 year Relative
return on 3 year 1st year 2nd year 3rd year 4th year 5th year
£100 return % return return return return return
Loomis Sayles US Equity Leaders 158 4 101.86 120.40 128.43 116.54 119.25
Dodge & Cox Worldwide US Stock 153 1 97.41 107.34 145.87 100.48 118.08
Important information
The value of investments, and the income derived from them, can go down as well as up and you can get back less than you originally invested.
Past performance should not be considered a reliable indicator of future returns. Different funds carry varying levels of risk depending on the
geographical region and industry sector in which they invest. You should make yourself aware of these specific risks prior to investing. This guide
does not constitute personal advice.16 Spot the Dog
European dogs
European politics was never far from the headlines
in Watch dog
2018. Italy’s populist government battled with the EU Universe Dogs %
over their budget, while more recently French
President Macron’s reforms have triggered violent
protests on
the streets of Paris. Alongside this, momentum in
Number of Funds 86 18 21%
Eurozone growth has faded with the German
economy teetering on recession. Value of Funds (£mn) £43,633.91 £6,017.83 14%
This political unrest and waning economic growth
Benchmark
has spilled over into volatility in the European
markets, and 2018 was the region’s worst calendar 3 years 5 years
year since 2011. Small and mid-cap companies MSCI Europe ex UK 126.98 134.46
performed especially badly, which is usually bad
news for active fund managers – so perhaps it’s In the doghouse v Pedigree picks
not surprising that the European kennel has
become more crowded in this edition. There are 220
now 18 dogs holding more than £6 billion of 210
investors’ money. Of these 18 funds, 5 have 200
unfortunately failed to escape since our last edition. 190
180
One of the repeat offenders is the Janus Henderson
170
European Selected Opportunities fund. The former
Total return
160
blockbuster fund was run by star manager Roger
150
Guy at Gartmore until 2010, but Janus Henderson’s
(%)
140
John Bennett and Andrew McCarthy are now at the
130
helm. The fund is joined in the kennel by new
120
entrant Janus Henderson European Focus, which is
110
also managed by the pair.
100
90
Dec 13 Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Jun 17 Dec 17 Jun 18 Dec 18
Jupiter European MSCI Europe ex UK FP Argonaut European Alpha
Source: Lipper for Investment Management
Important information
The value of investments, and the income derived from them, can go down as well as up and you can get back less than you
originally invested. Past performance should not be considered a reliable indicator of future returns. Different funds carry varying
levels of risk depending on the geographical region and industry sector in which they invest. You should make yourself aware of
these specific risks prior to investing. This guide does not constitute personal advice.Spot the Dog 17
In the doghouse
3 year Relative
return on 3 year 1st year 2nd year 3rd year 4th year 5th year
£100 return % return return return return return
FP Argonaut European Alpha 93 -26 82.14 114.93 98.97 116.13 104.04
Barclays Europe (ex-UK) Alpha 99 -22 83.01 114.68 104.11 114.29 98.31
Invesco European Opportunities (UK) 107 -16 85.78 110.61 113.04 116.90 97.03
Merian European Equity (Ex UK) 107 -16 80.42 115.10 115.77 103.63 99.99
Invesco European Smaller Companies 114 -14 84.49 118.21 114.05 123.43 97.76
BMO European Smaller Companies Ex UK 114 -14 85.74 121.10 110.18 N/A N/A
HSBC European Growth 111 -13 85.38 115.61 112.28 110.56 98.83
Schroder European Recovery 113 -11 87.45 115.88 111.63 110.13 98.72
Liontrust European Income 115 -10 89.17 112.30 114.36 110.00 99.91
Threadneedle European 114 -10 90.11 115.52 109.82 113.55 100.43
Standard Life European Equity Income 116 -9 87.03 113.80 117.08 107.47 101.23
Fidelity European Opportunities 115 -9 85.95 114.39 117.30 113.73 97.43
Legg Mason IF Martin Currie European Unconstrained 115 -9 88.73 114.30 113.44 106.79 96.32
PUTM European 117 -8 87.87 113.59 116.67 109.97 97.15
LF Canlife European 117 -8 88.48 115.12 115.10 110.26 98.15
Janus Henderson European Selected Opportunities 118 -7 90.24 112.53 116.14 108.78 103.40
Janus Henderson European Focus 118 -7 90.21 113.65 115.26 110.28 105.02
FP CRUX European 118 -7 85.68 115.69 118.75 N/A N/A
No unauthorised copying
Pedigree picks
3 year Relative
3 year 1st year 2nd year 3rd year 4th year 5th year
return on return return return return return
£100 return %
Jupiter European 134 5 99.66 127.71 105.19 122.90 105.93
Barings Europe Select* 133 1 89.74 123.13 120.76 119.03 101.54
FP CRUX European Special Situations 124 -2 84.84 120.85 121.38 113.24 101.65
EdenTree Amity European 125 -2 86.68 118.84 121.37 108.00 97.75
Benchmark: *EMIX Smaller European (ex UK) Companies No unauthorised
copying
Important information
The value of investments, and the income derived from them, can go down as well as up and you can get back less than you
originally invested. Past performance should not be considered a reliable indicator of future returns. Different funds carry varying
levels of risk depending on the geographical region and industry sector in which they invest. You should make yourself aware of
these specific risks prior to investing. This guide does not constitute personal advice.18 Spot the Dog
Asia Pacific dogs
The Asia Pacific kennel is the second-smallest in this Watch
edition, with £109 million of assets spread between dog
just three pooches. These are new entrants Jupiter Universe Dogs %
Asian
and Neptune China, and repeat offender Allianz Total Number of Funds 49 3 6%
Return Asian Equity – which is back in the doghouse Value of Funds (£mn) £17,627.57 £109.31
for the fourth time in a row.
1%
The three funds each made losses of around 15%
for investors in what was a difficult 2018 for Asia
Benchmark
Pacific funds. The region ended the year down
8.6%, with local currencies cushioning the fall as 3 years 5 years
they strengthened against sterling. Rising interest MSCI AC Asia Pacific ex Japan 146.85 154.61
rates, US dollar strength and increasing trade
friction all contributed to this poor performance. In the doghouse v Pedigree picks
200
190
180
170
160
150
Total return
140
130
(%)
120
110
100
90
80
Dec 13 Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Jun 17 Dec 17 Jun 18 Dec 18
Schroder ISF Asian Total Return MSCI AC Asia Pacific ex Japan
Jupiter Asian
Source: Lipper for Investment Management
In the doghouse
3 year Relative 3 1st year 2nd year 3rd year 4th year 5th year
return on year return
£100 % return return return return return
Jupiter Asian 124 -15 85.67 117.69 123.41 102.35 112.14
Allianz Total Return Asian Equity* 133 -11 86.91 129.14 118.09 95.36 112.37
Neptune China** 134 -9 85.43 133.05 118.05 99.83 96.17
Benchmark: *MSCI AC Far East ex Japan, **MSCI China No unauthorised copying
Pedigree picks
3 year Relative 3
return on year return 1st year 2nd year 3rd year 4th year 5th year
£100 % return return return return return
Schroder ISF Asian Total Return 149 1 90.32 127.96 128.69 102.48 113.62
Stewart Investors Asia Pacific Leaders 143 -3 105.40 113.45 119.64 101.94 119.85
No unauthorised copying
Important information
The value of investments can go down as well as up and you can get back less than you originally invested. Past performance
should not be considered a reliable indicator of future returns. Different funds carry varying levels of risk depending on the
geographical region and industry sectors in which they invest. You should make yourself aware of these specific risks prior to
investing.Spot the Dog 19
Global Emerging Markets dogs
Emerging markets faced a number of political and Watch
economic challenges last year. They include a dog
high- profile trade spat between China and the Universe Dogs %
US, and mounting pressure on companies that
have borrowed heavily on the international market as Number of Funds 37 5 14%
a strong US dollar pushed up interest costs. Value of Funds (£mn) £15,227.49 £1,825.81 12%
These factors, combined with a slowdown in
Chinese growth, saw emerging markets sharply Benchmark
underperform their developed counterparts in
3 years 5 years
2018.
MSCI Emerging Markets 152.57 143.76
Against this backdrop we have seen the return
of the Global Emerging Markets kennel in 2019, In the doghouse v Pedigree picks
after a temporary hiatus for our last edition.
This time we caught five bad dogs, totalling 190
£1.8 billion of clients’ assets. Top dog 180
Threadneedle Global Emerging Markets Equity 170
remains in the kennel for a second time, and is
160
Total return
joined by pooches from Newton, St. James’s
150
Place and Janus Henderson.
(%)
140
It must also be mentioned that the Somerset
130
Emerging Markets Dividend Growth fund, which has
found its way into the kennel but also appears on our 120
list of rated funds. The fund manager has faced a 110
number of issues recently which have harmed returns 100
– including holding an allocation to Turkish
90
companies, which were affected by a currency crisis
80
last year. But despite these challenges and the
Dec 13 Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Jun 17 Dec 17 Jun 18 Dec 18
underperformance over the last three years, it is
believed that it can maintain its conviction in the fund Fidelity Emerging Markets MSCI Emerging Markets
Threadneedle Global Emerging Markets Equity
and can deliver for investors over the long term.
Source: Lipper for Investment Management
In the doghouse
3 year Relative
3 year 1st year 2nd year 3rd year 4th year 5th year return
return on
£100 return % return return return return
Threadneedle Global Emerging Markets Equity 130 -15 84.68 120.96 126.88 88.74 103.58
MI Somerset Emerging Markets Dividend Growth 131 -14 84.54 121.78 126.83 93.61 108.41
Newton Emerging Income Institutional 131 -14 88.26 113.84 129.90 87.10 101.11
St. James's Place Global Emerging Markets 136 -11 89.91 118.50 127.71 91.17 103.61
Janus Henderson Emerging Markets Opportunities 139 -9 88.36 119.41 131.86 93.75 104.82
No unauthorised copying
Pedigree picks
3 year Relative
3 year 1st year 2nd year 3rd year 4th year 5th year return
return on
£100 return % return return return return
Fidelity Emerging Markets 132 -13 84.95 130.14 119.67 98.86 105.90
No unauthorised copying
Important information
The value of investments, and the income derived from them, can go down as well as up and you can get back less than you originally invested.
Past performance should not be considered a reliable indicator of future returns. Different funds carry varying levels of risk depending on the
geographical region and industry sector in which they invest. You should make yourself aware of these specific risks prior to investing. This
guide does not constitute personal advice. Underlying investments in emerging markets are generally less well-regulated than the UK. There is
an increased chance of political and economic instability with less reliable custody, dealing and settlement arrangements. The market(s) can be
less liquid. If a fund investing in markets is affected by currency exchange rates, the investment could both increase or decrease. These
investments therefore carry more risk.20 Spot the Dog
Global dogs
The Global kennel has historically been one of Watch dog
the biggest in Spot the Dog, and this edition is
Universe Dogs %
no exception. This time we have identified 20
badly behaved pooches holding more than £9
billion
Over half of the names on the list, such as Neptune Number of Funds 147 20 14%
Global Income and Threadneedle Global Equity Value of Funds (£mn) £103,242.12 £9,600.87 9%
Income, aim to provide investors with a regular
income. These funds are typically underweight the US
Benchmark
market, where dividends are low, and tend to avoid
big technology and new media companies as most of 3 years 5 years
them do not pay dividends. However, massive MSCI World 141.40 167.10
increases in the share prices of these companies have
boosted global stock market returns in recent years, In the doghouse v Pedigree picks
leaving many income funds underperforming in
relative terms. 270
260
A notable inclusion in the kennel is Artemis Global 250
Income. At £3.9 billion in size this popular fund 240
230
towers over all other global dogs, and it also appears
220
on our list of rated funds. There are several reasons 200
Total return
why the fund has underperformed in recent years. 190
180
Firstly, as a value investor the fund manager has 170
(%)
missed out on the great performance of growth 160
140
stocks recently. He also searches less well-trodden 130
areas of the market and has a bias towards small and 120
medium-sized companies, which means the fund will 110
100
sometimes be out of step with the wider market – as 90
was the case in 2018. However, we do maintain our Dec 13 Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Jun 17 Dec 17 Jun 18 Dec 18
conviction in the fund, but as with all of our rated Fundsmith Equity MSCI World Standard Life Global Equity
funds we will continue to monitor its performance Unconstrained
closely. Source: Lipper for Investment Management
Important information
The value of investments, and the income derived from them, can go down as well as up and you can get back less than you
originally invested. Past performance should not be considered a reliable indicator of future returns. Different funds carry varying
levels of risk depending on the geographical region and industry sector in which they invest. You should make yourself aware of
these specific risks prior to investing. This guide does not constitute personal advice.Spot the Dog 21
In the doghouse
3 year Relative
return on 3 year 1st year 2nd year 3rd year 4th year 5th year
£100 return % return return return return return
UBS Global Enhanced Equity Income* 110 -23 90.10 111.98 108.89 101.09 N/A
Standard Life Global Equity Unconstrained 110 -22 87.79 110.88 112.82 110.53 111.24
Neptune Global Income 115 -19 94.90 108.07 112.31 102.72 104.46
Scottish Mutual International Growth 117 -17 88.69 110.70 119.44 108.18 108.05
Standard Life Global Equity Income* 118 -17 91.83 108.16 118.43 109.86 106.22
Artemis Global Income* 120 -16 87.51 111.62 122.49 106.55 112.88
Royal Bank Of Scotland International Growth 125 -12 96.25 108.18 119.61 103.76 108.35
Templeton Growth* 125 -12 90.68 110.09 125.63 100.36 105.48
Threadneedle Global Equity Income* 126 -11 91.72 109.20 126.23 106.44 103.32
St. James's Place UK & International Income** 107 -11 88.42 111.64 108.34 103.81 103.74
BlackRock Global Equity* 129 -10 93.98 109.64 125.05 104.58 105.74
JPM Global Unconstrained Equity 127 -10 94.29 108.88 124.08 107.90 112.85
Janus Henderson Global Equity Income 127 -10 92.77 111.11 123.12 106.48 107.20
Legg Mason IF Martin Currie Global Equity Income 128 -10 92.55 109.93 125.65 99.51 104.09
BlackRock Global Income* 129 -10 93.83 108.92 126.08 107.77 109.53
St. James's Place Global Equity Income 129 -9 93.65 107.93 127.44 101.91 107.26
Jupiter Merlin Worldwide Portfolio 129 -8 96.80 111.74 119.66 104.18 107.89
Scottish Widows Opportunities Portfolio 120 -8 90.78 110.26 120.31 102.79 107.39
Schroder MM International*** 132 -8 95.05 108.31 127.95 106.03 107.09
Jupiter Global Equity Income* 133 -7 95.03 109.75 127.61 102.17 109.21
Benchmark: *MSCI AC World, **MSCI United Kingdon All Cap, ***MSCI World ex
No unauthorised copying
UK
Pedigree picks
3 year Relative
return on 3 year 1st year 2nd year 3rd year 4th year 5th year
£100 return % return return return return return
Fundsmith Equity 160 13 102.18 122.23 128.29 115.81 123.45
Baillie Gifford Global Discovery* 153 9 104.72 131.92 110.63 112.55 107.95
BMO Responsible Global Equity 140 -1 96.34 117.66 123.23 109.32 108.13
Benchmark: *MSCI World Small Cap No unauthorised copying
Important information
The value of investments, and the income derived from them, can go down as well as up and you can get back less than you originally invested.
Past performance should not be considered a reliable indicator of future returns. Different funds carry varying levels of risk depending on the
geographical region and industry sector in which they invest. You should make yourself aware of these specific risks prior to investing. This guide
does not constitute personal advice.22 Spot the Dog
Is it time to take a hard look
at all of your investments?
Sadly, the funds listed in Spot the Dog represent One of the biggest pitfalls with choosing
the tip of the iceberg for underachieving and managing your own investments can
investments – the very ‘worst of the worst’. We be the failure to review your investments.
have also only looked at equity funds, not bonds, Taking your eye off the ball can not only
property or targeted absolute return funds. The mean quietly enduring disappointing
industry is littered with also-rans returns from individual funds, but also
that have escaped inclusion, so don’t assume that
having a mix of investments that may not
all is well if the funds you own aren’t in these
be appropriate for your goals, or appetite
tables. It is important to regularly review all of
for risk.
your investments and check whether they remain
right for you – some of your investments could be It makes sense to step back every now and then,
seriously lagging. weed out any investments that no longer deserve a
place in your portfolio and also consider whether you
More and more people are choosing to
should rebalance your exposure to different asset
manage their own investments. And while
classes, such as equities and bonds, markets and
many enjoy taking control and monitoring
geographies. As various investments will perform
their progress, others find that their early
differently over time, this inevitably means that your
enthusiasm gradually wanes, or they simply
exposure to different markets will drift – potentially
don’t have the time to devote to investing
turning an initially low-risk portfolio into a much
given the busy lives they lead.
higher-risk one.To see our full range of services
and invest:
Go to www.bestpricefs.co.uk
Call us on 01639 860111
Email Richard.harry@bestpricefs.co.uk
Important information
The value of your investments, and the income derived from them, can go down as well as up and you may get back less than you
originally invested. Past performance is not a guide to the future. Prevailing tax rates and reliefs are dependent on your individual
circumstances and are subject to change. This guide does not constitute personal advice. Different funds carry varying levels of risk
depending on the geographical region and industry sector in which they invest. You should make yourself aware of these specific risks
prior to investing.
Issued by Tilney Investment Management Services Limited, which is authorised and regulated by the Financial Conduct Authority. Financial
services may be provided by other companies in the Tilney Group, further details of which are available atYou can also read
