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Our partner, Bestinvest has just released the latest edition of their much admired biannual report, ‘Spot the Dog’. The publication is the bane of under performing investment funds because it starkly highlights those that are not providing value for investors.
‘Spot the Dog’ identifies investment funds that are performing particularly badly against market benchmarks. To qualify as a ‘dog’ a fund has to perform at least 10% below the standard industry benchmarks each year for the last three years. Except in exceptional circumstances that represents more than a bad run of luck, it is consistent under performance that is likely to have a serious impact on those who have their money invested.
What does a dog fund mean to an investor?
Well frankly it’snot good news. Let’s take a look as an example at the UK All Companies Dogs. The worst performing fund in the sector was Manek Growth which holds $33mn of investment capital. An investing of $100 Manek Growth over the last three years is now worth just $62. By contrast the same $100 invested in the sector’s best performer over the last three years, the Liontrust Special Situations fund, would be worth $158.
It is important to stress that ‘Spot the Dog’ is not a list of funds that should be automatically sold. There may be a particular reason for a fund appearing on the list; a particular strategy by the fund manager or because market conditions are not right for the holdings in the current stage of the market cycle. ‘Dog funds’ should not necessarily be earmarked for selling, but they certainly warrant close investigation to ascertain whether the investor’s objectives are in line with those of the fund manager.
How can you ensure you are not invested in the wrong funds?
The modern financial world is complicated and for people without a close interest in world markets the sheer complexity and the volume of information required to manage their investments effectively is simply overwhelming.
At Infinity we recognise that quality investment management is highly specialised and requires an enormous amount of research, professional judgement and expertise. That’s why when it comes to our client’s money we recommend the services of Bestinvest. Throughout their organisation they have specialist researchers and investment professionals that through a robust process actively manage funds to get the best possible results in line with the client’s objectives. And they do it rather well which is why they have been named the UK, Wealth Manager of the Year twice in the last three years.
Investment management by Bestinvest is exclusive in Asia to Infinity clients.
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