Bestinvest’s latest snapshot of consistently underperforming investment funds has been released today. It finds 137 equity funds* – the same tally as the last edition – ranked as so called ‘Dog’ funds. A quarter of the latest list of hounds fall under the ESG banner. Worryingly, the level of investors’ wealth held by the misbehaving mutts jumped 26% to £67.44 billion from £53.42bn in the last edition.
It has been a challenging three years for fund managers looking to outperform stock markets, which is why the latest Spot the Dog report – a statistical snapshot of fund performance produced by online investment service Bestinvest – still contains a high number of poorly-disciplined equity investment funds.
The latest tally of misbehaving mutts is 137 – that’s the same number of humdrum hounds that met Bestinvest’s longstanding screening criteria in August last year (though not all the funds are the same). What is concerning, however, is the value of assets held by ‘dog’ funds increased to £67.44 billion – that’s a 26% uplift on the £53.42bn of investor’s wealth held by disobedient pups in the last edition of the report.
The latest Bestinvest Spot the Dog report is available from 11pm on Friday February 21, 2025 and which you can access via this link
Spot the Dog – Bestinvest’s biannual report closely followed by investors for more than three decades – highlights the funds that have consistently underperformed their relevant market index over three consecutive 12-month periods and by 5% or more over the entire three years analysed – in this case the three years ended December 31, 2024.
Of course, advisers will be only too well aware that funds can endure periods of underperformance for a variety of reasons. While it can come down to poor decision making, it can also be because a style and strategy that has worked well over the longer term has fallen out of step with more recent market trends.
Investors concerned as to why so many funds are continuing to undershoot their benchmarks must consider the myriad of challenges facing the global economy over the past three years. Rapidly rising inflation in 2021 was already posing a challenge for financial markets, a phenomenon initially caused by post-pandemic supply chain pressures and then exacerbated by the surge in energy prices following Russia’s invasion of Ukraine in 2022.
This accounts for the continuation of a notable trend that Bestinvest say they have observed in recent editions: the high representation of Dog funds badged with sustainable, responsible, ethical or impact investing qualities as part of their remit. A quarter of the latest List of Dog funds fall under the environmental, social and governance (ESG)** investment banner.
Jason Hollands, Managing Director of Bestinvest by Evelyn Partners, says: “The financial markets have been unsympathetic to funds with ESG properties in recent years in part because of soaring energy prices but also owing to negative returns from alternative energy shares both in 2023 and 2024. Over the three-year period covered in our latest report, the MSCI World Energy Index delivered a total return in GBP of 71.3%***, well ahead of the MSCI AC World Index total return of 28.6%.
“Compare this to the alternative and renewable energy market, which fell out of favour during the post-pandemic surge in energy demand, and the story is very different; The MSCI Global Alternative Energy Index declined by –48.8% over the same three-year period highlighting why managers focused on green energy may have faced some challenges.
“We also cannot ignore the tearaway performance of names such as Nvidia, the microchip maker, Alphabet (which owns Google) and other US giants such as Amazon, Meta Platforms (owner of Facebook) and Microsoft. Along with Tesla and Apple, this narrow band of stocks earned the moniker the ‘Magnificent Seven’. While this unique club may have lost some of their lustre more recently, they contributed to AI Frenzy at the end of 2023 and early 2024 that helped to propel the US stock market and global equities. This may explain why global and US equity funds not fully exposed to this extremely concentrated band of influential stocks struggled to consistently beat the markets.”
Unsurprisingly, global equity funds dominated the latest List of serial howlers with 44, holding £35.16bn of wealth, sent to the kennels – the same number of global laggards that featured in the List last summer. However, it was not the worst-performing sector. That accolade went to the UK Smaller Companies sector, which had the highest proportion of Dog funds as a percentage of its size with 11 yapping terriers accounting for 28% of the sector.
Another area of concern, however, is the size and number of the big beasts featuring in the pack. Fifteen Great-Dane sized funds – each over £1bn in size – account for £40.14bn, and therefore 60%, of the lagging assets overall. This is a big step up from the 10 Great Danes rounded up in the last report with a combined value of £26.81bn.
Hollands adds: “Our Spot the Dog analysis is designed to remind investors to monitor their portfolio at regular intervals to assess how well their assets are performing. While the report should never be treated as a ‘sell’ list, it highlights the importance of keeping a close watch on your investments and assessing what action, if any, is required and when.
“Actively managed funds can underperform for a variety of reasons – from a run of bad luck to instability in the team or simply bad decision making. So, investors should endeavour to find managers with the right skills to deliver superior long-term returns. This is imperative to justify paying the fees to be invested in those funds.
“A fund with a style or process out of kilter with recent market trends may also be adversely impacted. This is why identifying whether a fund is struggling with short-term challenges or more deep-rooted issues with long-term consequences is vital for investors considering whether to remove an investment from their portfolio.
“At this time of year when people are typically considering where they might invest their current ISA allowance, it is wise to first of all review what they already own before adding new funds.”
Top 10 worst-performing dog funds overall
| Fund | IA Sector | Size (£bn) | Value of £100 invested after 3 years | 3-year under performance (%) versus benchmark | |
| 1 | Artemis Positive Future Fund | Global | 0.01 | £66.72 | – 63% |
| 2 | Baillie Gifford Global Discovery Fund | Global | 0.43 | £54.17 | – 56% |
| 3 | Baillie Gifford Japanese Smaller Companies | Japan | 0.14 | £63.76 | – 49% |
| 4 | Aegon Sustainable Equity | Global | 0.17 | £81.39 | – 49% |
| 5 | L&G Future World Sust UK Eq Foc | UK All Companies | 0.02 | £72.28 | – 47% |
| 6 | FP WHEB Sustainability Impact | Global | 0.58 | £83.73 | – 46% |
| 7 | SVM World Equity | Global | 0.06 | £83.95 | – 46% |
| 8 | AXA ACT People & Planet Equity | Global | 0.03 | £86.33 | – 44% |
| 9 | Heriot Global Smaller Companies | Global | 0.02 | £86.82 | – 43% |
| 10 | AXA ACT Framlington Clean Economy | Global | 0.05 | £88.69 | – 41% |
Source: Spot the Dog, February 2025
Performance figures shown are net of fees with income reinvested.
Top 10 biggest beasts by size
| Fund | IA Sector | Size (£bn) | Value of £100 invested after 3 years | 3-year under performance (%) | |
| 1 | SJP Global Quality Fund | Global | 9.43 | £104.45 | -26 |
| 2 | SJP Sustainable & Responsible Equity | Global | 5.27 | £106.36 | -24% |
| 3 | Fidelity Global Special Situations | Global | 3.32 | £116.19 | -14% |
| 4 | Liontrust Special Situations | UK All Companies | 2.70 | £97.11 | -22% |
| 5 | WS Lindsell Train UK Equity | UK All Companies | 2.67 | £100.62 | -18% |
| 6 | Fidelity Asia | Asia Pacific Excluding Japan | 2.37 | £94.57 | -12% |
| 7 | JPM Emerging Markets | Global Emerging Markets | 2.24 | £87.23 | -15% |
| 8 | BNY Mellon Long-Term Global Equity | Global | 2.14 | £114.13 | -16% |
| 9 | Janus Henderson Global Sustainable Equity | Global | 1.95 | £110.81 | -19% |
| 10 | CT American | North America | 1.79 | £125.36 | -11% |
Source: Spot the Dog, February 2025
Performance figures shown are net of fees with income reinvested.
* How a fund becomes a Dog
Bestinvest only analyses UK domiciled and regulated open-ended investment companies (OEICs) and unit trusts that invest predominantly in equities. We also only look at funds open to retail investors. To make it onto the list, we apply two filters. First a fund must first have failed to beat the appropriate benchmark index over three consecutive 12-month periods, to highlight consistent underperformance. Second, the fund must have underperformed the benchmark by 5% or more over the entire three-year period of analysis – which in this case ends on December 31, 2024.
** Funds explicitly badged as sustainable, responsible, socially responsible, ethical or themed to address climate change or an environmental remit.
***Returns cited are in total return terms (including dividends) in GBP terms. Source: Lipper for the three years to 31/12/24).
