Underperforming dogs in investments: Over 300 funds failing to meet their benchmarks

Underperforming dogs in investments: Over 300 funds failing to meet their benchmarks - is now the right moment to cash out?

In a recent Spot the Dog report by Bestinvest, 137 equity investment funds holding a combined £53.42 billion of investors' wealth have been identified as underperforming their relevant market benchmarks over the past three years, as of the end of June 2024. This figure represents a 44% drop on the £95.26bn in assets, featured in the previous Spot the Dog report in March 2024.

The report, which focuses on funds that have failed to beat their benchmark over three consecutive 12-month periods by 5% or more, has highlighted several funds that have underperformed significantly.

For instance, the FTF Martin Currie Japan Equity has underperformed by -64% over the past three years, while the Aegon Sustainable Equity Fund and the SJP Global Quality Fund have underperformed by -52% and -27% respectively. The Artemis Positive Future Fund, the L&G Future World Sust UK Eq Foc, and the Ninety One Global Environment Fund have underperformed by -71%, -51%, and -37% respectively.

Interestingly, around a third of the global funds on the list focus on sustainable investing. This group did not benefit from the surge in oil and gas-related shares during the period, which could explain their underperformance. Similarly, around a quarter of underperforming UK funds are ethical and sustainable funds due to their lack of exposure to the UK market's sizeable energy and commodities sectors.

The technology sector, particularly artificial intelligence and the Magnificent 7 in the US, has been dominating the stock market. Much of the rise in stock markets has come from technology and energy stocks, which could be a factor contributing to the underperformance of funds that do not have a significant allocation to these sectors.

On the other hand, the FTSE 100 and S&P 500 have hit record levels recently, indicating a strong performance in the broader market. The Jupiter Japan Income Fund, for example, has underperformed by -8% over the past three years, while the Fidelity Asia Fund has underperformed by -12%.

The search results do not provide specific information about the ten largest "Spot the Dog" underperforming funds in the current Bestinvest report. However, it is noted that global equity funds have been hit hardest, with 44 funds sent to the kennels (poor performers). Ten "Great-Dane sized funds" account for half of the lagging assets, with a total size of £26.81 billion.

Investors are advised to carefully review their investment portfolios and consider the performance of their funds in light of these findings. It is essential to ensure that investments are aligned with individual financial goals and risk tolerance.

The full Spot the Dog report can be accessed on the Bestinvest website for further details and analysis.

Underperforming dogs in investments: Over 300 funds failing to meet their benchmarks - is now the right moment to cash out?