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Newton, M&G and HSBC have found themselves in the doghouse according to the latest listing of poor performing funds from IFA firm Bestinvest.
They make up the five worst performing fund management groups along with AXA Framlington and Threadneedle in Bestinvest’s twice-yearly Spot the Dog report.
The five are managing a combined £8 billion of dog funds between them, and are all new entrants to the worst five list.
The Newton Higher Income fund is the biggest dog according to the report, with nearly £3 billion under management, and with the poor-performing £30 million Newton Japan growth fund, takes the group to the top of the dog list.
M&G, meanwhile, has suffered because of the poor performance of funds at parent company Prudential, according to Bestinvest senior research analyst Steve Marriot.
‘What is most worrying for Pru investors is that their dog range covers many different sectors including the UK, international and American desks,’ he said. ‘This suggest a deep-rooted problem and so investors in Prudential funds may want to consider an alternative provider.’
HSBC comes in at third place due to the performance of its UK Growth & Income Acc fund, the HSBC Income Inc fund and its HSBC Greater China Inc fund, while the downturn in fortunes for AXA Framlington’s UK Equity Income Inc and AXA Framlington Monthly Income Inc funds have propelled it to fourth on the list.
‘For several years, these funds posted strong returns due to the contribution from the holdings in small and medium-sized companies. However, in recent times the illiquidity of these stocks has proved to be a burden,’ said Marriot.
‘[Manager George] Luckraft has been unable to remove these from his portfolios at a time when their falling values have dealt a damaging blow to performance, ultimately leading to dog status.’
Meanwhile, Threadneedle has suffered since the departure of Darrel O’Dea from its Threadneedle European Select C1 fund according to Marriot, leading to its placing at number five in the worst-offenders list.
Equity income funds are making up an increasing proportion of dog funds, with more than half of the 92 named in the Bestinvest report coming from the sector.
Assets held in dog funds have risen to a combined £19 billion, a rise of more than 80% compared to the end of 2007.
'The number of undeperforming funds tends to increase along with a rise in market volatility. This year is no exception,' said Bestinvest investment manager Hugo Shaw.