Did you hear about the billion pound funds which are in the dog house? Well you can read all about them in volume 2 of Tilney’s Spot the Dog guide for 2019. Billed as ‘The Guide fund managers would like to ban’, the quarterly publication lifts the lid on underperforming funds and fund managers.
- Popularity points with fund managers: 0
- Popularity points with investors: tons!
As the introduction to the latest Spot the Dog points out, low interest rates and quantitative easing i.e. the printing of money by central banks in recent years have, in some cases, enabled fund managers to sometimes mask ill-advised decisions. Now the tables are turning with interest rates rising and investors’ returns could be more adversely affected by bad decision-making on the part of fund managers. That means that it is increasingly important to get your investments right.
You shouldn’t have to put up with bad performance and you need to keep abreast of what your investments are doing so you can review your portfolio when things start going pear-shaped and decide whether you need to take remediary action. Spot the Dog is one of the tools at your disposal for weeding out the runts of the litter and homing in on the investment puppies that are thriving.
The number of dog funds in the latest report, defined as those that have failed to meet the benchmark by at least 5% for at least three years, has decreased significantly since January, from 111 to 59. Nevertheless, that still means that investors hold £32.6 billion in dog funds, compared to £54.6 billion in January. And six of the 59 dog funds are worth over £1 billion.
You can check out your investments in the guide to see if they are pedigree picks or in the dog house. A word of caution though, finding you are invested in a dog doesn’t necessarily mean that you should rush to sell. Even some funds which have underperformed for three years on the trot may still be ones that will deliver for investors in the future.
The best advice we can give for those invested in howlers is to chat to your financial advisor. They will be able to advise on the best course of action within the context of your overall portfolio.
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