Assets in 'dog' funds double over past year

The independent investment manager and financial adviser's biannual Spot the Dog report shows retail investor money in underperforming funds has jumped from £7.2bn in January last year and £13.72bn from the last report in October. The actual number of dog funds has also risen from 77 to 90.

Invesco Perpetual has £1.77bn of poorly performing assets across three funds and is the only group to have a ‘dog' product in the US sector. While the group sits atop the list, Bestinvest says it is confident Invesco Perpetual's "strong investment culture" will enable it to rebound.

Schroders sits in second place on £1.64bn, the same position it held in October 2009.

Andy Brough's Schroder Mid 250 makes another appearance in the Spot the Dog report. Bestinvest says it downgraded the Mid 250 fund in 2008 and believes the size of the vehicle has been a concern for some time. It says the fall in assets under management in the fund indicates many investors are also losing patience.

Rounding out the top five is Henderson on £1.21bn, Scottish Widows/SWIP £980m and F&C £852m.

Bestinvest senior investment adviser Adrian Lowcock says the rise in the number of dog funds is of greatest concern.

"It seems that more fund managers than ever before are underperforming their benchmarks and many investors are experiencing rank underperformance," he says.

"The upswing in the value of assets under management in dog funds highlights the huge number of assets being held in underperforming vehicles and the rise in the actual number of dog funds illustrates just how this is spreading across asset classes.

"It is vital that investors review their portfolios regularly to ensure they are getting the best possible returns."

Employment can be solved by backing mid-sized firms

MID-SIZED companies hold the key to plugging the UK unemployment gap as public sector cuts loom, according to a leading economic forecasting group.

The Ernst & Young Item Club says that mid-sized companies are even more important than start-ups in creating employment, adding that it is vital that they receive backing from the government as employment in the public sector is set to shrink.

Bob Forsyth, head of strategic growth markets at Ernst & Young said: “Small start-ups have a vital role to play in creating new industries, but the most dynamic enterprises with the highest impact on our economy tend to be medium-sized firms that have spent several years laying the foundations for fast growth.”

Item Club has called on the government to provide a stable tax policy so that mid-sized companies can flourish.

Scott Halliday, managing partner added: “Stable tax policy that is pro-entrepreneur is important to economic growth and development. government can also encourage innovation by maintaining tax incentives for research and development.

The group also wants to see regulation simplified. “Complex regulation can, quite unintentionally, kill off innovation,” Halliday said.