The number of ‘dog funds’ has increased by 170% since August 2023, according to Bestinvest’s latest ‘Spot the Dog’ report.
The report found 151 equity investment funds holding £95.26bn consistently underperformed.
In August, only 56 funds were highlighted in the last report.
To make it into the list, a fund must have underperformed compared to the market it invests in by 5% or more over a three-year period.
A second filter is that the fund must also have underperformed in three successive 12-month periods in a row.
Global equity funds make up 49 of the 151 dog funds listed, which is more than double the 24 listed in August.
The number of UK funds featured on the list also increased to 34, from five in August.
Two of Britain’s most-prominent fund managers, Terry Smith and Nick Train saw the funds they manage the Fundsmith Equity and WS Lindsell Train UK Equity funds entering the list for the first time ever.
Bestinvest did want to note, however, that both funds have delivered returns significantly ahead of their relevant indices over the longer-term.
The report also highlights the “incredible gains” made by Alphabet (which owns Google), Amazon, Apple, Meta Platforms (owner of Facebook), Microsoft, chipmaker NVIDIA and Tesla, which have earned the moniker the ‘Magnificent Seven’.
The companies benefited from investor excitement about the potential benefits to their businesses from Artificial Intelligence (AI).
Bestinvest managing director Jason Hollands said: “These last three years have been one of the most challenging periods in living memory for fund managers to consistently beat markets, because of sharply divergent performance from different sectors as the world reopened from the pandemic, followed by a war in Europe and, more recently, excitement about Artificial Intelligence driving extreme market concentration in a small cluster of mega-sized companies.”
The Baillie Gifford Global Discovery, SVS Aubrey Global Conviction, AXA ACT People & Planet Equity, FTF Martin Currie Japan Equity and the Aegon Sustainable Equity were listed as the top five worst performing dog funds overall.
The ‘Spot the Dog’ report is a biannual study, which has been produced since the mid-1990s.
