Investment platform Bestinvest has released its latest 'Spot the Dog' report highlighting the investment funds that have underperformed.

The so-calld 'dog' funds have finished up below their benchmark index for three years in a row.

The Spot the Dog report is published every six months, and the bad news is that since July 2014 the number of funds to avoid at all costs has jumped from 49 to 60.

That represents a total of £23 billion of investors' money rotting away in dreadful funds, up from £19.6 billion in the previous report.

The fund managers in the doghouse

Huge fund managers with large ranges and massive assets are far more likely to appear in Spot the Dog reports, thanks to their sheer size. Nevertheless, Bestinvest's report identifies the fund-management groups with the largest number of dogs, which often include some of the UK's biggest names in the field.

Here is a list of 10 fund managers that have left millions of British investors out of pocket.

Fund group

Number

of funds

Value of

dogs (£bn)

% of total

dog assets

M&G

2

£7.94

35%

BNY Mellon (Newton)

2

£4.86

21%

Aberdeen

9

£1.58

7%

Fidelity

1

£0.99

4%

Santander

2

£0.97

4%

St. James’s Place

2

£0.90

4%

Baillie Gifford

2

£0.78

3%

Morgan Stanley

1

£0.61

3%

Neptune

5

£0.56

2%

Majedie

1

£0.41

2%

Thanks to M&G's continued underperformance, Bestinvest dubs it 'Mutts & Growlers', but notable absentees from this list among larger groups include Henderson, Invesco Perpetual, JO Hambro CM, JP Morgan, Legal & General IM, Liontrust, Royal London, Standard Life Investments and Threadneedle. 

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Struggling sectors

As well as picking the right fund manager, investors seeking growth need to choose where geographically when they place their bets.

The fund space with the largest number of dog funds remains the Global sector, with 19 funds, which represents 15% the funds in the sector. But the sector with the highest proportion of awful funds continues to be North America, where 12 dog funds amount to 20% of the total sector.

In the previous Spot the Dog report, not one Europe (excluding UK) fund made this list. However, there are now four Europe dog funds.

On a more positive note, not a single UK Equity Income fund has perfomed so poorly to become a dog fund, with even the average fund in this sector having outperformed the wider UK market in each of the last four 12-month periods.

The worst funds of all

To find out if any of your funds have turned into dogs, you can download a free copy of the latest edition of Spot the Dog from Bestinvest or request one by calling 020 7189 2400. 

In this final table, here are the worst fund in each sector and its three-year performance against its respective benchmark (based on investing £100 over the three years ending 31st December 2014).

Sector

Fund

Three-year

return

Performance

against

benchmark

UK All Companies

Scottish Widows UK Select Growth

£108

-21%

UK Smaller Companies

SF Webb Capital Smaller Companies Growth

£58

-67%

European

Neptune European Opportunities

£123

-17%

Global Emerging Markets

FP HEXAM Global Emerging Markets

£71

-37%

Asia Pacific

Newton Oriental

£109

-15%

North America

IFSL Harewood US Enhanced Income

£143

-18%

Japan

Schroder Japan Alpha Plus

£107

-19%

Global

PFS Taube Global

£104

-34%

As you can see, two of these funds have massively underperformed their market benchmarks.

SF Webb Capital Smaller Companies Growth has lost 42% over three years, turning £100 into £58. Similarly, FP HEXAM Global Emerging Markets has turned £100 into £71 since 2012, down 37%. 

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Keep on top of your investment performance

To avoid backing the wrong manager, taking on too much risk, or suffering poor service, you should regularly review all of your investments. When you spot your hard-earned cash wasting away in an inappropriate fund, it may well be time to move it elsewhere.

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