Aberdeen Standard Investments in the doghouse with four funds which lagged the market

 
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The report prompts a wave of dog pictures across the financial world twice every year (Source: Getty)

Giant fund houses Aberdeen Standard Investments and Fidelity have topped the list every fund manager wants to avoid: the "dog" funds which have lagged behind soaring markets.

Aberdeen Standard, formed last year in a mega-merger, has four funds in the biannual "spot the dog" list of poor-performing funds that invest in the stock markets compiled by Bestinvest, a subsidiary of financial planner Tilney.

The funds, all of which underperformed their benchmark by five per cent or more over a three-year period of analysis, are spread across some of the biggest names in asset management, including UBS, St James's Place, and Jupiter.

Spot the top 10 dogs

Fund house Number of dog funds Value of dogs (£m) Previous ranking
Aberdeen Standard 4 1753.21 1
Fidelity 2 954.67 N/A
UBS 1 882.4 N/A
St James's Place 1 471 2
Jupiter 3 402.77 4
Threadneedle 1 349.06 16
Legg Mason 3 292.23 N/A
Franklin Templeton 1 257 N/A
Janus Henderson 1 241.59 3
Schroders 1 220.5 N/A

Aberdeen Standard retained its top spot on the list (Source: Bestinvest)

The assets managed by the four Aberdeen Standard funds labelled as "dogs" totalled £1.75bn, mainly because of underperformance from its £1.2bn Aberdeen Asia Pacific Equity fund. However, the Aberdeen performance has improved dramatically from two years ago, when it had 11 funds in the list.

Fidelity, meanwhile, has re-entered the list in second place because of its £955m Fidelity American fund. The US investment house appointed Sujay Kodlikeri last summer to take over the fund after a period of poor performance.

Read more: Aberdeen and M&G funds in the doghouse

Identifying underperforming funds has become more difficult in the past year as global stock markets have surged. The number of global stock funds on the list has fallen from 17 to seven in the past six months as a strengthening global economy has buoyed shares in many emerging economies.

The level of assets languishing in dog funds has fallen to £6.4bn, down from £7.6bn in the last update six months ago, although Bestinvest's report noted that much of this fall was attributable to the £2bn St. James’s Place Equity Income fund, which "narrowly escaped" inclusion.

Jason Hollands, managing director at Bestinvest, said: “In the last five years the number of dog funds has been as high as 60 and only two years ago there was as much as £18 billion tied up in such investments.

"The drop in the number of both dog funds and the amount of investor money in these is very welcome. Only time will tell whether this is a temporary blip or a sign that the investment industry has got its house in order by replacing underachieving managers or merging away seriously failing funds."

An Aberdeen Standard Investments spokesperson, comments: "It's encouraging that the number of our funds in the doghouse continues to fall and that only four out of our combined 150-plus UK mutual funds are on the list. Our Asia Pacific fund has produced good returns but has lagged the benchmark as our fund managers have been cautious about investing in some of the high-flying tech stocks.

"Similarly our UK and European funds have also produced reasonable returns for investors. The enlarged and strengthened UK and European equity teams‎ and our focus on fundamental, in-house research, makes us confident that we will deliver for investors over the long term."

Bestinvest also noted that some notable large fund houses "deserve a tummy rub" for not having any funds in the list, including Aviva Investors, Axa, Artemis, Baring, BMO Global,Blackrock, First State, Invesco Perpetual, JO Hambro, Kames Capital, Legal & General, Liontrust, Man GLG, M&G, and Royal London.

Read more: Investment Comment: How to spot the dog funds – and what to do if you own one

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