Global emerging market (GEM) funds dominate the top of Money Observer's Deficient 50 list, which highlights funds that have consistently disappointed investors with fourth quartile returns over each of the past three years compared to their peer group.
Funds from the UK all companies sectors populate the bottom of the table, however with more than 230 qualifying funds it is not unusual to find a higher number of consistently poor performers compared with other sectors with fewer constituents.
The Deficient 50 is the antithesis of Money Observer's regular Consistent 50 analysis, which highlights consistently top-performing funds on a quarterly basis. The Deficient 50 ranks funds with the poorest three-year return at the top of the table.
In the three years to 1 June, GEM funds performed exceptionally poorly, with four of the 10 worst performers invested in the region.
The persistently worst GEM performer is FP HEXAM Global Emerging Markets, managed by founding partner of the boutique firm Bryan Collings, which has lost nearly 38 per cent in the three years to 1 June compared to a loss of nearly 6 per cent from the IMA global emerging markets sector.
The second worst performer in the region and the fifth poorest overall is Templeton Global Emerging Markets, managed by Dr. Mark Mobius, which lost 28 per cent in the three years to 1 June, although the fund's performance has picked up significantly year to date.
Emerging markets suffered particularly from the mass sell-offs seen in June 2013 and January 2014 following the US Federal Reserve's announcement that it would begin tapering its quantitative easing programme, which had helped to bolster emerging markets since 2009.
A number of global funds also performed poorly in the three years to 1 June, with seven of the 20 most disappointing funds residing in the sector. The worst global performer is First State Global Resources, which is also the second worst performer overall with a loss of nearly 36 per cent compared to a gain of 22 per cent for the IMA global sector.
As a natural resources specialist the First State fund's performance is unsurprising as negative sentiment and falling share prices continue to hound natural resource stocks. Like Templeton Global Emerging Markets, however, the fund has improved year to date, returning nearly 10 per cent since 1 January and making it the third best performer in a sector consisting of over 250 funds.
The fourth worst-performing fund overall is SVM Global Opportunities, managed by Colin McLean, which over three years has lost nearly 30 per cent. As a global generalist this performance is unusual, however, with assets under management of only £3.5 million, the fund's diminishing size (the fund has shrunk from £33.5 million in July 2011) may have been a factor.
Indeed SVM has announced the fund will be 'merged' into the firm's much larger World Equity fund, managed by Neil Veitch, as Global Opportunities is 'no longer commercially viable'.
While GEM and global funds disappointed the most, the UK did not escape unscathed. The worst performer overall was a UK smaller companies fund, SF Webb Capital Smaller Companies Growth, which lost nearly 59 per cent in the three years to 1 June compared to a gain of 47 per cent in the IMA UK smaller companies sector.
This fund, previously run by Tom Winnifrith and named SF T1PS Smaller Companies Growth, was taken over by smaller companies fund manager Peter Webb in mid 2012, since when it has continued to underperform the sector.
The second worst-performing fund in the sector is TM Progressive UK Smaller Companies, which has returned 24 per cent in the same period, underlining the huge disparity between SF Webb's performance and that of the sector as a whole.
Of those UK funds sitting at the bottom of the Deficient 50 table, the most disappointing was Scottish Widows Investment Partnership (SWIP) UK Opportunities, which eked out a 1 per cent return in the three years to 1 June compared to a gain of 33 per cent from the IMA UK all companies sector.
This was followed by F&C UK Alpha, Scottish Widows UK Select Growth, FF&P Concentrated UK Equity, Scottish Widows HIFML Special Situations and Halifax Special Situations, all of which achieved returns of less than 5 per cent over three years.
Multi-asset funds also fared poorly with a number of high-profile funds from asset managers including Schroder, Legal and General and again, Scottish Widows, bringing home returns of less than 10 per cent in the three years to 1 June.
|Rank||Fund||Sector||Return on £100 in three years to 1 June|
|1||SF Webb Smaller Companies||UK Smaller Companies||41.76|
|2||First State Global Resources||Global||64.89|
|3||FP HEXAM Global Emerging Markets||Global Emerging Markets||65.03|
|4||SVM Global Opportunities||Global||70.35|
|5||Templeton Global Emerging Markets||Global Emerging Markets||73.02|
|6||HC FCM Salamanca Global Property||Property||76.55|
|7||Neptune Emerging Markets||Global Emerging Markets||79.65|
|8||Lazard Developing Markets||Global Emerging Markets||81.5|
|9||CF Richmond Multi Asset||Targeted Absolute Return||84.71|
|10||HSBC Asian Growth||Asia Pacific Excluding Japan||87.15|
|11||Absolute Asia AM Pacific Rim Equities||Asia Pacific Excluding Japan||89.45|
|12||CF Lacomp World||Global||91.58|
|13||Newton Oriental||Asia Pacific Excluding Japan||92.53|
|14||M&G Global Basics||Global||93.64|
|15||Neptune Global Special Situations||Global||95.81|
|16||PFS Taube Global||Global||97.14|
|17||M&G Managed Growth||Flexible Investment||97.89|
|18||FP Distinction Diversified Real Return||Mixed Investment 20-60% Shares||98.61|
|19||Neptune Global Equity||Global||100|
|20||Legal & General Multi Manager Growth||Flexible Investment||100.53|
|21||SWIP UK Opportunities||UK All Companies||101|
|22||F&C UK Alpha||UK All Companies||101.32|
|23||Aviva Investors Diversified Strategy||Mixed Investment 20-60% Shares||101.34|
|24||Scottish Widows UK Select Growth||UK All Companies||101.99|
|25||First State Global Agribusiness||Global||102.36|
|27||FF&P Concentrated UK Equity||UK All Companies||102.95|
|28||Schroder Multi-Manager Cautious Managed||Mixed Investment 20-60% Shares||104.22|
|29||Legal & General Multi-Manager Balanced||Mixed Investment 40-85% Shares||104.44|
|30||Scottish Widows HIFML Special Situations||UK All Companies||104.63|
|31||Halifax Special Situations||UK All Companies||104.76|
|33||Scottish Widows HIFML Diversified Income||Mixed Investment 20-60% Shares||104.82|
|34||Legg Mason Global Blue Chip Bond||£ Corporate Bond||104.98|
|35||CF KB Endeavour Multi-Asset Balanced||Mixed Investment 40-85% Shares||106.13|
|36||Schroder Multi-Manager Strategic Balanced||Mixed Investment 40-85% Shares||108.12|
|37||St James's Place Investment Grade Corporate Bond||£ Corporate Bond||108.34|
|38||BlackRock Global Equity||Global||108.41|
|39||Investec American||North America||109.47|
|40||WAY MA Cautious Portfolio||Mixed Investment 20-60% Shares||110.02|
|41||SWIP Multi-Manager Optimal Multi Asset||Mixed Investment 40-85% Shares||110.7|
|42||Cavendish North American||North America||116.39|
|43||SWIP UK Income||UK Equity Income||118.58|
|44||Scottish Widows HIFML UK Equity||UK Equity Income||118.68|
|45||CF IM UK Growth||UK All Companies||118.8|
|46||Halifax UK Equity Income||UK Equity Income||118.87|
|47||SF Delmore Growth & Income||UK All Companies||119.25|
|48||Scottish Widows UK Equity Income||UK Equity Income||119.73|
|49||CF IM Capital UK Equity & Bond Income||UK Equity & Bond Income||120.04|
|50||Scottish Widows HIFML UK High Income||UK Equity Income||120.06|
|Notes: The Deficient 50 funds have three consecutive years of fourth-quartile performance in their respective sectors, and are ranked by their three-year performance (worst at the top) to 1 June 2014, with net income reinvested. Funds in the following IMA sectors are not included in the ranking: Specialist, short-term money market money market and protected. Source: Lipper as at 1 June 2014.|
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