Article by Christina
The Best Invest list of the UK’s worst performing funds for Investment Planners has just had its half yearly update.
The funds on the list are known as “Dog Funds” whose performance has been lower than the average market performance by at least 5% and for at least the last three years. It’s worth looking at the list if you are a self-investor as it may inform your decision making. As Independent Financial Advisers and Investment Planners, we always take this information into consideration and would be highly unlikely to recommend investing into any of these funds.
Worryingly the value of funds now in the Dog category has increased in the six months to the end of June. Up from £19 billion to over £46 billion. That 146%. This reflects the difficult investment market conditions over the last three years or more. The number of funds has also increased to over 50 now.
But this is not as bad as the 150 funds on the list back in 2021 and the 86 in January 2022. However, there are now 9 Great Danes on the list. Those are funds valued at over £1 billion each.
Currently, the biggest culprit is now St James Place.
They now have six Dog Funds worth a staggering £29 billion, which is over 60% of total value of all the UK’s Dog Funds.
What a performance from the UK’s largest financial advice firm!
Especially to say that they promote their restricted rather than independent advice service as giving clients exclusive access to their own funds. You might wonder who would want access to some of the worst performing funds in the UK? Brought by a firm who are also one of the most expensive advice firms in terms of fund charges, initial advice fees and ongoing advice fees. Not to mention their exit charges for withdrawing your own money.
Others for Investment Planners to look out for on the list include Artemis, Schroders (owned by HBOS), Scottish Widows and Colombia Threadneedle.
Here’s the top 10 worst performers according to Bestinvest:
- SJP Global Equity £11.4 billion
- SJP Global Growth £7.5 billion
- SJP International Equity £7 billion
- SJP Growth European £1.8 billion
- Scottish Widows UK Growth £1.8 billion
- Artemis US Select £1.5 billion
- Columbia Responsible Global £1.4 billion
- Abrdn UK Small Companies £1.1 billion
- Troy Asset Masnagement trojan £1.0 billion
- SJP Global Emerging £0.9 billion
These levels of poor financial performance might also be creeping into the mortgage market as well.
It seems that over £30 billion worth of so called “risky” mortgages have been underwritten by UK Banks in the last 12 months. These are mortgages where the customer is borrowing more than 4.5 times their salary. That makes these customers susceptible to base rate increases affecting their ability to make repayments. The Banks have rules in place to prevent them from lending more than 15% of their mortgage funds to risky customers in order to prevent a repeat of the 2008 financial problems.
Some Banks are now getting close to these limits.
Although things have improved on the interest only mortgage side. Numbers are now down to less than 1 million, 50% lower than in 2015. Borrowers are also paying more into their mortgages to try to reduce their balances and therefore payments. Although some lenders do have restrictions on the amount of over payments you can make, so please make sure you check first.
