The IMA global sector contains more underperforming funds relative to the number of funds in the sector than any other in the IMA equity universe, according to BestInvest's twice-yearly 'Spot the Dog' report.
July's edition of the broker's controversial paper shows that 20 out of 259 funds in the Investment Management Association (IMA) global sector underperformed their benchmarks during the past three years, representing 16 per cent of the sector.
However despite these results, Andrew Pitts, editor of Money Observer, warns investors to be mindful of the effect that currency movements may have had on the returns of global funds.
For a more detailed analysis of the report and the full list of dog funds, read: North American dogs proliferating, says Bestinvest.
'Investors have got to be aware that because of sterling's ongoing strength, returns from many unhedged overseas funds are being depressed and so will inevitably be behind their UK-focused counterparts,' he says.
Top global underperformers include M&G Global Basics, which has returned 14 per cent less than its benchmark, the FTSE Global Basics composite index, over the past three years. Managed by Randeep Somel and Colm D'Olier since November, the fund has suffered from its exposure to emerging markets and resources companies, which have had a torrid time of late.
To compile its report, BestInvest identifies equity-focused open-ended funds that have failed to beat their benchmark over three consecutive 12-month periods, then highlights those that have underperformed their benchmarks by 10 per cent or more over the entire three-year period.
A total of 49 'dogs' were identified within the sectors it examined, which did not include any fixed income or multi-asset sectors. This was down from 53 underperformers in January.
Commenting on the results Jason Hollands, managing director of communications at Bestinvest, says: 'With stock market indices hovering around all-time highs, funds investing in equities are once again popular with retail investors as their memories of the financial crisis fade.
'Yet the differences in performance between funds within the same sectors can vary enormously, so it is vital to be very selective when making your choices.'