Neil Woodford has left his mark all over the latest Spot the Dog report before Link Fund Solutions puts down his Woodford Equity Income fund for good.
The latest Spot the Dog report from Bestinvest reveals £43.9bn worth of savings are tied up in funds that have underperformed the market more than 5% after fees over three years and also underperformed in each consecutive year. The funds collectively rake in over £410m of fees and costs each year, according to Bestinvest calculations.
In total 91 funds make it into report with a number of the so-called Great Dane funds, those with approximately £1bn in assets or more, having links to Woodford, including his former SJP segregated mandate and a Hargreaves Lansdown fund that had a large weighting to Woodford Equity Income.
The £5.7bn Invesco High Income fund, managed by Woodford’s successor Mark Barnett, was the largest fund named and shamed followed by the £3.8bn JPM US Equity Income fund.
The £3bn fund formerly known as Woodford Equity Income, which has been renamed LF Equity Income as it moves into wind down mode, rounded out the three largest dog funds. It first entered the dog house a year ago.
|Fund||Size||Sector||3 year under-performance|
|Invesco High Income (UK) Y||£5.72bn||UK All Companies||-18%|
|JPM US Equity Income C||£3.76bn||North America||-8%|
|LF Equity Income (formerly Woodford)||£2.98bn||UK All Companies||-46%|
|HL Multi-Manager Income & Growth A||£2.71bn||UK Equity Income||-8%|
|Invesco UK Income (UK) Y||£2.57bn||UK All Companies||-17%|
|Artemis Global Income I||£2.53bn||Global Equity Income||-16%|
|Invesco European Equity (UK) Y||£2.18bn||Europe ex UK||-12%|
|M&G Recovery I||£2.06bn||UK All Companies||-15%|
|Man GLG Japan CoreAlpha Professional||£2.03bn||Japan||-12%|
|Schroders QEP Global Active Value Z||£1.11bn||Global||-15%|
|St. James’s Place UK High Income L||£1.09bn||UK Equity Income||-24%|
|Jupiter UK Growth I||£0.95bn||UK All Companies||-12%|
|Invesco UK Growth (UK) Y||£0.92bn||UK All Companies||-6%|
|Schroders QEP Global Care I||£0.84bn||Global||-6%|
|Janus Henderson Global Equity Income||£0.78bn||Global Equity Income||-11%|
HL fund shamed weeks after certifying itself good value
The £2.7bn HL Multi-Manager Income & Growth fund also ranked highly in the list of Great Dane dog funds.
The dubious honour comes weeks after the Hargreaves Lansdown Fund Managers board deemed the fund good value, along with all other funds in the HL multi-manager range, despite its sizeable allocation to the Woodford Equity Income fund and its high fees.
The value assessment noted the fund had underperformed its sector over five years and that its ongoing charge was “somewhat higher” than similar fund-of-funds. But the fund board concluded the fund “represents value for investors, based upon the level of service, performance against stated objective, as well as the benefits of scale investors receive”.
The fund had returned 25.13% over five years to the end of September 2019 compared to the 30.91% average in the Investment Association UK Equity Income sector, according to the assessment published in January.
The Spot the Dog report noted over three years it had underperformed the market by 8%.
Invesco has the most funds in the dog house… again
Mark Barnett, who has sought to distance himself from Woodford, manages three out of the 11 funds that has left Invesco licking its wounds with the dishonour of being the most prolific fund house in the report. Collectively, the Henley fund house represents £13bn worth of underperforming funds in the dog house.
Alongside the High Income fund, his Great Dane-sized £2.5bn Invesco Income fund also features as does UK Strategic Income.
A spokesperson from Invesco said the “market’s preference for predictability of revenues and earnings has produced a divergence in valuations that we believe is extreme”.
“Whilst a strong majority has given the government the ability to drive through legislation, the UK stock market continues to be undervalued in our view with many UK domiciled companies trading at very low valuations relative to their global peers.”
Beyond Barnett, the £2.2bn Invesco European Equity, which was recently handed to Oliver Collin when Stephanie Butcher became CIO, and £920m Invesco UK Growth are among the largest funds from the firm that landed in the dog house.
SJP falls short despite efforts to keep Woodford on a tight leash
St James’s Place claimed it kept Woodford on a tight leash, with its segregated mandate precluding him from holding unquoteds, but has still seen its SJP High Income fund land in the dog house.
It has underperformed markets by 24% over three years. It dumped Woodford as manager of the mandate in June 2019, days after his fund suspended.
An SJP spokesperson argued its dumping of Woodford highlighted that it was “well positioned to make changes when appropriate”.
“It’s important to note that St James’s Place fund performance is shown net of charges in this report, including ongoing advice, and therefore these analyses do not make accurate like-for-like comparisons.”
SJP made the same point in the last Spot the Dog report, which deemed SJP UK High Income as the “worst behaved dog in the kennel”.
North America sector goes to the dogs
Tilney managing director Jason Hollands said the “spectre of Woodford undoubtedly looms large over this edition” noting it was likely to be his final appearance from his former flagship fund.
“The spotlight also falls heavily on Mark Barnett’s funds, though the range of Invesco products appearing is wider than the UK team and symptomatic of the value style bias across a number of the equity desks in Henley, which has been out of favour with the market’s craving for quality growth stocks, Hollands said.
The IA North America sector had the highest number of dog funds with 30% of the universe “falling foul” of Bestinvest criteria. Some way behind was the IA European sector, where 19% of funds landed in the kennel.
Bestinvest noted the the IA UK Smaller Companies sector remains notably canine-free.