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Aberdeen Standard and Fidelity top 'dog fund' list

Aberdeen Standard Investments tops online stockbroker Bestinvest's regular study of underperforming funds.

 
Aberdeen Standard and Fidelity top 'dog fund' list
 

Aberdeen Standard Investments and Fidelity have topped the list of 'dog funds' compiled by online stockbroker Bestinvest in its regular study of underperforming investments.

Aberdeen Standard, formed from the merger of Standard Life and Aberdeen Asset Management last year, has a table-topping £1.8 billion of assets in 'dogs', the moniker handed to funds that have underperformed their benchmark over three consecutive 12-month periods, and by more than 5% over three years.

The chief culprit is the £1.2 billion Aberdeen Asia Pacific Equity fund, which has lagged its benchmark by 10% over the last three years, although it has delivered a positive return over that period, of 38%.

The fund, managed by Aberdeen's Asian equities team, has been a frequent feature in the list, while Aberdeen Asset Management has consistently been named as among the fund groups with the most assets in 'dog funds'.

But while the now-merged group has topped the list, the £1.7 billion in 'dog' assets in four funds is an improvement on two years ago, when assets were £3 billion spread among 11 funds.

Bestinvest said it expected the merger to act as the catalyst for some of the group's underperforming funds to be scrapped.

'As the integration of the Aberdeen and Standard Life businesses progresses we expect a rationalisation of one of the combined fund range which will provide an opportunity for the group to put its dog days behind it,' it said.

Second on the list is Fidelity, with £955 million of 'dog' assets, due largely to the return of the £906 million Fidelity American fund to the list.

The fund escaped the list last summer, and a switch in manager from Aditya Khowala to Sujay Kodlikeri had sparked hopes of an upturn in performance. 

But Kodlikeri has found it equally difficult to outpace the notoriously hard-to-beat US market, contributing to a three-year return of 41%, lagging the market by 11%.

One positive for investors from the study was the decline in 'dog' funds overall, to just 26 of the nearly 2,700 open-ended funds housed in the UK, accounting for £6.4 billion of assets.

'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,' said Jason Hollands, Bestinvest managing director.

'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.'

The 'dog' list

Group 'Dog' funds Value of 'dogs'
Aberdeen Standard Aberdeen UK Equity, UK Equity Income, European Smaller Companies Equity, Asia Pacific Equity £1.8bn
Fidelity  Fidelity American, Japan £955m
UBS UBS Global Enhanced Equity Income £882m
St James's Place St James's Place Asia Pacific £471m
Jupiter Jupiter Global Managed, Global Equity Income, US Small & Midcap Companies £403m
Threadneedle Threadneedle Global Emerging Markets Equity £349m
Legg Mason Legg Mason IF Martin Currie North America, IF QS Emerging Markets Equity, IF Martin Currie Global Equity Income £292m
Franklin Templeton Templeton Growth £257m
Janus Henderson Janus Henderson US Growth £242m
Schroders Schroder Global Healthcare £220m

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