Leading investment group M&G is in the dog house as a new report reveals it's holding a massive £10.7bn of investors’ cash in serially underperforming funds.
UK savers have left a massive £18bn of cash in funds which are failing to deliver - and M&G is responsible for 60 per cent of it.
The findings come from Tilney Bestinvest’s bi-annual Spot the Dog report, which defines a "dog fund" as one which has underperformed its benchmark for three consecutive years on the trot, and by more than 10 per cent over that period.
Prudential-owned M&G has been flagged up since 2014 as its former flagship products, the £3.4bn M&G Recovery and the £1.8bn M&G Global Basics funds have continually failed to deliver returns. This year, its massive £5.48bn M&G Global Dividend fund also makes the cut, meaning the total assets M&G’s running in dog funds tops £10bn.
Read more: Brexodus as billions pulled from UK funds
Global equity markets have been rocked by a series of black swan events in the last 12 months. Commodities crashed to an 11-year low, China experienced a bubble and subsequent burst in its stock markets, while several Latin American economies have the blues. The UK too has been volatile around the Brexit referendum while investors are expressing continuing scepticism towards central bank policies in Europe and Japan.
“Every year investors are promised jam tomorrow, and that these funds will turner a corner,” says Hollands. “While fund management companies like to push their star managers and the funds that happen to be doing well at the time, the reality is many of them will have skeletons in the closet that don’t get mentioned in advertising campaigns. The financial services industry has an unfortunate habit of overpromising and under-delivering.”
“We are disappointed to be included in the report and acknowledge the challenging performance some of the funds have experienced. We have been addressing this and the performance of these funds this year is encouraging,” says Graham Mason, chief investment officer for equities, multi asset and retail fixed income at M&G Investments.