HBOS tops hall of shame as Bestinvest publishes latest funds 'dog' report

The number of investment funds that performed significantly worse than the market has almost halved over the last six months, according to the latest “Spot the Dog” report from Bestinvest.

On a more positive note, the latest report does show a sharp fall in the number of 'dog' investment funds since the last edition. Picture: Jon Savage

The online investment service identified 77 so-called dog funds in its latest snapshot, which tend to prove controversial within the fund management community. That total is a sharp drop from the 150 funds that the firm cited six months ago.

At the top of the hall of shame in the latest report is Lloyds Banking Group-owned HBOS. It means HBOS has knocked Invesco off its perch, a dubious honour it had held in six of the biannual reports until now.

HBOS had some £6.85 billion of its investors' cash in five of these underperforming funds, while Invesco had £5bn in three, according to Bestinvest.

St James's Place had £3.92bn across four funds and Scottish Widows had £2.73bn in four funds.

There are seven funds with more than £1bn in the latest list, managed by HBOS, Scottish Widows, St James's Place, Fidelity and Abrdn, formerly Standard Life Aberdeen.

To make it into the Bestinvest list, funds must have given their investors worse returns than the markets they invest in for each of the last three years. The funds must also have underperformed their markets by at least 5 per cent across the three-year period.

Bestinvest noted that two of the funds it examined had underperformed by 49 per cent.

Managing director Jason Hollands said: "In most cases soaring markets have masked the fact that the decisions made by the managers of dog funds have actually detracted from the returns their investors might have received. Such funds represent poor value for money given the fees investors have paid.

“But on a more positive note, the latest report does show a sharp fall in the number of dog funds since our last edition. In a large part this is down to a much better period for managers who target cheap, undervalued shares rather than high growth companies.

“The key message of this edition of Spot the Dog is not to take it for granted that your investments are doing OK, just because they may have risen in value over the last year.”

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