M&G and Aberdeen still in the doghouse

Added 30th July 2016

Tilney Bestinvest’s “Spot the Dog” report names M&G as the firm with the highest number of assets in underperforming funds and Aberdeen Asset Management as the fund house with the most ‘dog funds.’

M&G and Aberdeen still in the doghouse

Out of the 30 consistently worst performing unit trusts and OEICs identified in Tilney Bestinvest’s report, M&G manages 66% of the total dog fund assets, which add up to £11.9bn.

M&G has been the underperforming top dog in AUM terms consecutively since July 2014 with the lacklustre performance of its former flagship £3.4bn M&G Recovery fund and newly formed £5.48bn M&G Global Dividend fund dragging it down.

Aberdeen, which recently reported £8.9bn in net outflows across its asset classes, remained in the dog house with six funds making the list, though this is down from the 11 funds that made the cut in the last edition.

Tilney Bestinvest also pointed out that the St. James’s Place Far East Fund previously managed by Aberdeen also earned a spot in the top 30 consistent worst performers. SJP announced this week it had replaced Aberdeen as fund manager with First State Stewart Asia.

Newcomers Invesco Perpetual and Columbia Threadneedle were dog collared for the first time, the report said.

On the flip side, the UK Equities and Europe sectors were notable for having very few badly behaving funds. Only two UK Equities funds were flagged up and only one out of 77 funds in Europe was named and shamed. 

Japan, Asia and Emerging Markets sectors were also largely in the clear.

“Spot the Dog” emphasises the ever shifting landscape of the investment management industry in which fame is fleeting, said Jason Hollands, managing director of Tilney Bestinvest.

“The financial services industry has an unfortunate habit of overpromising and under-delivering. When all is going well, funds are heavily promoted and managers are feted like City rock stars. Yet some of these stars may have simply got lucky and turnout to be shooting stars that crash out of orbit. It’s a simple fact that many funds fail to beat their benchmarks over the long run, after all the fees have been taken – investors need to consider their fund managers carefully.

“Spot the Dog’s message is simple: no matter how thoroughly you research your choices ahead of investing, the fate of funds and their managers can change over time. Many fail to deliver and you need to monitor your investments closely.”

Graham Mason, chief investment officer , equities, multi asset and retail fixed income at M&G Investments responded: 

“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."

“Having outperformed in the first six years since launch, the M&G Global Dividend Fund faced a more difficult period in 2014 and 2015 as a result of the underperformance of its energy-related holdings," Mason said. "We are encouraged by this year’s top-decile performance which has been driven by a variety of sources, namely defensives such as healthcare, holdings with strong growth characteristics and holdings in the energy-related areas. The fund has continued to meet its objective of growing the income for our investors every year, since inception in 2008."

“We appointed a new lead manager to the M&G Global Basics Fund in December 2015. He has increased exposure to precious metals which has contributed to the fund’s top decile performance this yearr," he continued. "Though the short term is more positive, M&G's funds are managed for long term performance and we always encourage investors to take a similarly long term view when investing, as we believe best returns come with patience. We have learned over many years the importance of not changing our investment strategies to suit short-term trends and influences.” 

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