Schroders said nearly a quarter of all mutual funds in the report continued to underperform last year, and the funds it manages on behalf of Halifax and Scottish Widows have shown little signs of recovery. .
The total number of mutual funds listed as underperforming has increased from 31 in August 2022 to 44, according to the latest “Spot the Dog” survey published by investment platform Bestinvest, owned by wealth manager Evelyn Partners. bottom.
Monetary tightening in the second half of 2022 has slowed the recovery of mutual funds, with ‘dog’ fund holdings rising 78.5% from £10.7bn to £19.1bn, according to the report. His list of large funds holding over £1 billion has doubled in the last six months.
“There has been a significant shift in the market over the past year. Through 2021, growth investments have been leading the way,” said Jason Hollands, managing director of Evelyn Partners. He noted that many value-focused funds have moved forward as managers focused on UK SMEs have been punished.
The turning tide has reversed the fortunes of several asset managers, putting additional pressure on others who had regularly underperformed.
Columbia Threadneedle had four funds on the ‘dog’ list, managing £184m. It included Hargreaves Lansdown’s £1.8 billion multi-manager Special Situations Trust and his £2.2 billion international equity fund at St James’s Place.
Funds that invest in growth stocks have performed poorly as the tech boom faltered. Small and medium-sized businesses were particularly exposed to rising inflation and interest rates. But asset managers focused on value stocks, such as consumer goods companies, performed well, as did those who bought resource companies.
Around 900 UK mutual funds with a combined value of £611bn were reviewed by Bestinvest. Any fund that underperformed the appropriate index by at least 5% over a three-year period was called a ‘dog’ and was mostly compared to his MSCI UK All Cap Index.
Schroeder-managed funds accounted for 10 of the report’s 44 ‘dogs’ with around £7.5 billion in assets under management. This included his three brands of Halifax and his four Scottish Widows names, now managed by Schroeder. His £100 worth invested in Halifax’s Special Situations Fund three years ago is now worth just £84, according to reports.
But some investment groups seem to have reversed their fortunes, with Invesco holding just two underperforming funds and topping the list with 11 funds for several years.
Invesco said:[Performance] It’s noticeably improved as it approaches three years under the management of Ciaran Maron and James Goldstone. ”
Hollands said returns from actively managed funds should be weighed against fees, adding that the upcoming new tax year is a great time to reassess portfolios. He warned investors to take another look at funds that have changed management.
https://www.ft.com/content/52640c1c-18d3-4ff7-a5dc-5e81e5595288 Schroders come very close to Spot the Dog’s underperforming list