Tom Dobell’s £7.5bn portfolio is 229th out of 274 funds in the sector over three years, having returned just 18.81 per cent.
In the year-to-date it has made just 6.42 per cent while the sector is up more than twice that and the FTSE All Share has returned 11.75 per cent.
Performance of fund vs benchmark and index in 2012
Source: FE Analytics
However, both Hargreaves Lansdown and AWD Chase de Vere say the manager’s long-term record shows he can turn it around.
AWD Chase de Vere’s Patrick Connolly said: "We still hold it and are still putting clients’ money into it. He’s a manager with a good record over the longer term and we would expect M&G Recovery to recover. Some of his stocks will take some time to recover, of course."
"I would say it’s too soon to pull your money out."
Dobell took over the management of the fund in 2000 and data from FE Analytics shows that it is still a top-quartile performer over five and 10 years.
Over the past decade it has made 189.96 per cent while the FTSE All Share is up 124.99 per cent; it is the 13th-best performer out of the 168 funds in the sector with a track record that long.
Our data shows that Dobell’s portfolio was a top-quartile performer in every single calendar year from 2005 until 2010, when it slipped into the second quartile; it was a third-quartile performer in 2011 and is in the fourth quartile of the year-to-date.
Connolly says that as a recovery fund, it is inevitable the portfolio will suffer difficult periods.
"Tom Dobell is one of those managers who have periods when they do not perform particularly well when their stocks are out of fashion or take longer to recover," he explained. "Markets are driven by macro events at the moment, which is probably harder for him."
Rob Morgan, investment analyst at Hargreaves Lansdown, says that some of the areas Dobell has picked have been lagging, which explains his recent poor performance.
Although the manager doesn’t have any particular overweight, he holds a number of mining and resources stocks such as Kenmare Resources and First Quantum Materials, which have been struggling.
"These are the stocks that haven’t done so well," Morgan said. "They are frequently quoted on the AIM and in general investors are shying away from them right now."
Kenmare Resources, a top-10 holding in the fund, has had a poor year so far, losing 33.04 per cent.
Performance of stock year-to-date
Source: FE Analytics
The miner has suffered due to concerns of a slowdown in China – which has hit the sector as a whole – and stock-specific issues.
Dobell also suffers from being unable to hold the "expensive defensives" that have been in vogue and have done well over recent years, Morgan explains.
"There’s quite a lot of potential in the portfolio that hasn’t been realised. We would see this as a chance to back a manager who has a good long-term track record rather than worrying about recent performance too much," he said.
The minimum initial investment on the fund is £500 and the total expense ratio (TER) is 1.65 per cent.
FE Trustnet recently examined the difference that results in a single calendar year can make to the three- and five-year figures of a fund.