Bestinvest defines a dog fund as one that has underperformed its benchmark in each of the last three 12 months and by 10 per cent or more over the cumulative period.

While a number of these funds have brought in new managers over the past year, many others have made no changes.


UK Equity Income

Of all the groups operating in the sector, Scottish Widows came in for the most criticism from Bestinvest. Three of its seven funds are classified as dogs.

Scottish Widows HIFML UK Equity Income, Scottish Widows UK Equity Income and SWIP UK Income all make it on to the list. The last two are repeat offenders, having appeared in the previous study back in February this year.

Performance of funds vs benchmarks over 3-yrs



Source: FE Analytics

Chris Fontenla and David Keir, who previously ran Scottish Widows UK Equity Income, were removed from the fund as part of a reorganisation of the company’s investment team in April that saw 23 people lose their jobs.

Bestinvest says Scottish Widows is passing responsibility for much of its equity investing over to automated processes, which is expected to drive charges lower.

The funds' total expense ratios are already in the lowest quartile of the sector, which could come down further still.

Marlborough UK Income and Growth, Premier UK Alpha Income, Smith & Williamson UK Equity Income and Halifax UK Equity Income also made an appearance on the list.


UK All Companies

Scottish Widows’ former head of UK equities Peter Cockburn was responsible for two of the company’s three entrants in the sector – SWIP UK Opportunities and Scottish Widows UK Select Growth – and he was also removed from his post in April. Scottish Widows UK Growth makes up the trio.

Of the 182 UK All Companies funds suitable for retail investors, 28 – or 15 per cent – are classified as dogs, making it the worst performing of the three sectors in the UK equity space.

Legal & General has four dogs in the pound, including the L&G Growth fund run by its head of UK equities Robert Churchlow.

L&G Equity, L&G UK Special Situations and L&G Active Opportunities complete the set, with all of the funds except the newer Special Situations portfolio larger than the average fund in the sector.

The three older funds have all lost investors between 10 and 15 per cent over five years, although L&G Growth can point to top-quartile returns of 106.76 per cent over the last decade.

Performance of funds vs sector and benchmark



Source: FE Analytics

Although none of the funds' returns are too far off the sector average over three years, it is their substantial underperformance of the FTSE All Share benchmark that warrants their place on the list. 

Standard Life UK Opportunities lost 30.41 per cent in 2011, earning it Bestinvest’s "top dog" award. Andy Brough’s Schroder UK Mid 250 portfolio appears on the list for the sixth consecutive time.

BlackRock UK Dynamic, Marlborough Ethical, UBS UK Opportunites and CF Canlife General were also among the 28 dogs.


UK Smaller Companies

Four funds out of the 45 in the IMA UK Smaller Companies sector qualify as dogs, according to Bestinvest’s research.

These are SF Webb Capital Smaller Companies Growth, UBS UK Smaller Companies, Franklin UK Smaller Companies and Aberforth UK Small Companies.

Performance of fund vs sector over 3-yrs



Source: FE Analytics

Bestinvest says it retains its faith in the expertise of the Aberforth team, although data from FE Analytics shows the fund has substantially underperformed the sector average in recent years.

SF Webb Capital Smaller Companies Growth has recently changed its name following the departure of t1ps’ Tom Winnifrith, who has handed control of the fund to Peter Webb.