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A total of 151 equity funds were singled out as underperforming in BestInvest’s latest ‘Spot the Dog’ report, a 170% increase from the 56 funds listed in August.
The funds on the list have a total of £95.3bn of assets under management, up 106% from £46.2bn in August. The funds named include Terry Smith’s £23.4bn Fundsmith Equity and the £3.9bn WS Linsell Train UK Equity fund, managed by Nick Train.
The semi-annual report highlights funds that underperformed their associated index by 5% or more over three consecutive 12-month periods.
Global equities feature prominently, with 49 funds featured in the report, more than double the 24 funds featured in the previous edition.
See also: China funds record best performance in February, with average return of 9%
There has also been a significant increase in UK funds in the ‘doghouse’, with 34 in the previous report, up from just five in the previous report. BestInvest said this was due to higher energy and commodity prices in 2021 and 2022, which caused managers who lacked exposure to these parts of the market to lag behind the index. Ta.
BestInvest Managing Director Jason Hollands said: “Spot the Dog has been highlighting underperforming investment funds for 30 years to encourage investors to closely monitor their investments. This is not a ‘sell’ list, but a review of your investments. If something has been underperforming recently, this is a good time to understand why and consider its prospects.
“The last three years have been one of the most difficult in living memory as the world restarted from the pandemic, then war in Europe, and more recently for fund managers to consistently beat the market. As the sector resumed from the pandemic, the performance of each sector varied widely.” Excitement about artificial intelligence driving extreme market concentration into small clusters of giant companies. ”
Fundsmith and Lindsell Train join the ‘kennel’
Fundsmith Equity and Lindsell Train UK Equity were two of the largest funds to make the list, along with SJP’s £11bn Global Quality Fund and £6.8bn International Equity Fund. .
“When two of the most widely held funds run by respected managers are on the list, it’s important to explore why this happened,” said BestInvest’s Hollands. Stated.
“Manager Terry Smith targets blue-chip companies that generate high returns on capital and aims to hold these companies for the long term.The manager also trades stocks on short-term factors, We have always made it clear that we are not chasing trends or making big bets on the macro economy.
“For example, the fund does not hold stocks in companies that are highly sensitive to economic ups and downs, nor does it have exposure to energy, which has been the best-performing sector over the past three years. The company does not have significant investments in consumer goods and health care, with its largest exposure being in consumer staples and healthcare.
Top 10 largest funds by size
| fund | IA sector | Size (in billions) | After 3 years your investment will be £100. | Under 3 years old performance (%) | |
| 1 | Fundsmith Equity | global | 23.4 | £118 | -14% |
| 2 | SJP Global Quality Fund | global | 11.0 | £109 | -twenty three% |
| 3 | SJP International Stock | global | 6.8 | £112 | -twenty one% |
| Four | WS Linsell Train UK Shares | all uk costumes | 3.9 | £111 | -19% |
| Five | Fidelity Global Special Situations | global | 3.1 | £119 | -14% |
| 6 | Fidelity Asia | Asia Pacific | 2.6 | £80 | -13% |
| 7 | JPM Emerging Markets | Glbl Emerg Mkts | 2.1 | £76 | -16% |
| 8 | BNY Mellon Long Term Global Equivalence | global | 1.9 | £125 | -8% |
| 9 | Janus Henderson Glbl Sustain.Eq | global | 1.8 | £116 | -16% |
| Ten | Kuichi global environment | global | 1.8 | £99 | -34% |
Since its inception in November 2010, Fundsmith Equity has delivered a total return of 563%, significantly outpacing the MSCI World Index’s return of 351% over the same period, which has seen a recent ‘lag’. Hollands says it’s important to put it in context.
“Importantly, the fund’s philosophy and processes have not changed and the managers are sticking to the approach that has served investors incredibly well over the long term. We prefer fund managers who have a clear and consistent approach to those who tend to react to factors.”
WS Linsell Train UK Equity Fund is also a prominent fund in the latest list,” he added. “Like Fundsmith, managers Nick Train and the Linsell Train team take a long-term buy-and-hold approach, supporting a highly concentrated portfolio of businesses that we believe are exceptional. I am.
“The fund does not pursue positions based on the latest market trends or short-term economic outlook; its approach focuses on company-specific characteristics. Look for companies that have competitive advantages that can be created and are difficult to replicate, such as strong brands.
“These attributes mean the fund is heavily biased towards sectors such as beverages, personal goods and financial services. It has no exposure to energy, which has been the best performing part of the UK market over the past three years as oil prices soared.
“This has hampered its relative performance over the past three years, but since its inception in 2006 the fund has returned 404%, well ahead of the MSCI UK index’s return of 148%.”
In terms of overall performance, Baillie Gifford Global Discovery was the biggest underperformer, followed by SVS Aubrey Global Conviction, AXA ACT People & Planet Equity, FTF Martin Currie Japan Equity and Aegon Along with sustainable equity funds.
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