Latest Money Advisor report on poor investment funds

Money Advisor
Money Advisor

Article by Phil

The latest Best Invest “Dog Funds” list is out again for your money advisor to review.

Published every six months the list includes investments funds which have underperformed their benchmark by at least 5% over three consecutive years. This makes sure that funds don’t jump onto the list without good reason. They have to have been in the “doghouse” for at least three years to be considered!

In the last six months, the number of funds on the list has jumped from 56 to over 150. There are now almost £100 billion in funds held in investments on the “Dog Funds” list. A reflection on how markets have been performing recently. In fact, if you think that your investments aren’t quite doing as well as you’d hoped, you should remember that it could be worse!

The current worst performer is the Baillie Gifford Global Discovery fund, with over £600 million invested. If you’d invested £100 in this fund 3 years ago it would be worth only £47 today.

On the “Great Danes” list, it’s more bad news for St James Place (SJP) I’m afraid. Once again, they have two in the top 10. At #2 there’s the SJP Global Quality fund holding £11 billion. This fund would have returned you £9 for a £100 investment over the last three years. Not taking into account the SJP advice charges of course. At #3 is the SJP International Equity fund with almost £7 billion invested.

But the biggest “dog” of them all is the Fundsmith Equity fund with almost £25 billion invested. In an almost tragically comic turn of events, Fundsmith has recently been the target of scam Facebook and WhatsApp money advisor adverts. Both claiming that holding Terry Smiths stock would make them millionaires. You couldn’t make it up. But please do be careful and heed the warnings on their website.

Perhaps the growth of self-investing has meant that more investments are making the list. Why else would people keep their money invested in these funds?

According to the latest research by Boring Money, just over 30% of people have some kind of investment product. With under 40’s being the fastest growing number. But over 40% of investors have never used a money advisor to help them.

Of those using an adviser. The average investment is almost £250,000. Of those with no adviser the average is just over £80,000. But these are the ones who could do with more help and guidance.

Billions of pounds worth of investments have come from pensions drawn down since the introduction of Pension freedoms back in April 2015. A J Bell has looked at some of the key figures since then which include:

  • £72 billion worth of pension funds unlocked.
  • Over 700,000 new pensions accessed last year alone.
  • Over £1 billion reclaimed from HMRC by taxpayers overpaying after accessing their pensions for the first time.

It’s worth knowing that only 4% of those accessing their pensions took financial advice from any kind of regulated money advisor. Especially when you consider some of the poor investment performances highlighted in the Best Invest report.

Money Advisor
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