The second-worst performing sector was IMA North America, an area where Bestinvest says the failure rate for active fund managers is high. Eight out of 60, or 13 per cent, of North American funds are consistent underperformers according to the broker's analysis.
Investec American is the worst performer in the sector, delivering 26 per cent less than its benchmark, the S&P 500 index, over three years, although on a total return basis the fund has gained 11 per cent, or £11 on £100 invested.
European and UK-focused funds
Funds closer to home fared much better in the report, with not a single European ex UK or UK Equity Income fund rated a 'dog'.
According to data from FE Analytics, the two sectors have returned an average of 27 per cent and 38 per cent over three years respectively, while the only fund in either sector to deliver a negative return over three years is Elite Webb Capital Smaller Companies Income & Growth, which has lost 13.2 per cent during the period.
M&G retained its place as the worst-performing fund house overall, holding £10.7 billion of underperforming assets through its Recovery, Global Basics and American funds. This represents 55 per cent of the combined total assets of Bestinvest's 49 dog funds.
On an individual fund level, Standard Life's UK Smaller Companies was the most surprising 'dog'. Managed by the highly experienced Harry Nimmo, the £1.3 billion Money Observer Rated Fund is hugely popular with investors and over ten years has returned 294 per cent compared to 179 per cent from its sector, IMA UK smaller companies.
However, the fund's performance has waned of late, with Nimmo returning just 1.3 per cent over the past year compared to an average sector return of 15.8 per cent. This is largely due to the fund's huge 10.6 per cent loss year-to-date.
Despite this poor run, Hargreaves Lansdown's head of research Mark Dampier says investors should not necessarily sell out of Nimmo's fund.
'Nimmo has perhaps held his winners for too long; a lot of his stocks have sold off sharply. However, he is a long-term manager and long-term managers tend to underperform for periods of time. Over 10, 20 years small caps usually outperform the wider market,' he says.
Of the 49 'dog funds' identified by BestInvest, 15 were flagged in Money Observer's recent Deficient 50 report, including M&G Global Basics, Investec American, Fidelity Japan and Neptune Emerging Markets.
The antithesis of Money Observer's regular Consistent 50 analysis, which highlights consistently top-performing funds on a quarterly basis, the Deficient 50 lists those funds with the poorest three-year return.
|Rank||Fund||Sector||3-year return on £100 (£)||Relative 3-year return (%)||1st-year return (%)||2nd-year return (%)||3rd-year return (%)|
|1||SF Webb Capital Smaller Companies Growth||UK Smaller Companies||44||-71||119.08||75.69||48.82|
|2||FP HEXAM Global Emerging Markets||Global Emerging Markets||64||-32||100.39||93.68||68.01|
|3||Neptune Emerging Markets||Global Emerging Markets||79||-16||99.11||99.39||79.79|
|4||Baring Emerging Markets||Global Emerging Markets||81||-13||100||102.52||79.38|
|5||Martin Currie China||Asia Pacific||89||-14||100.63||110.56||79.93|
|6||Marlborough Far East Growth||Asia Pacific||90||-13||101.29||106.23||83.65|
|7||F&C Pacific Growth||Asia Pacific||92||-14||101.24||108.56||83.38|
|8||M&G Global Basics||Global||93||-27||98.76||109.77||85.75|
|9||Neptune Global Special Situations||Global||95||-25||99.23||110.9||86.68|
|10||Schroder Japan Alpha Plus||Japan||96||-19||97.04||110.33||89.6|
|11||PFS taube Global||Global||97||-28||102.89||105.16||89.35|
|12||Neptune Global Equity||Global||100||-22||104.72||112.62||85.11|
|13||SWIP UK Opportunities||UK All Companies||101||-22||101.32||116.76||84.92|
|14||FF&P Concentrated UK Equity||UK All Companies||103||-20||104.13||109.63||90.11|
|15||Halifax Special Situations||UK All Companies||105||-19||104.56||116.83||85.55|
|17||F&C UK Alpha||UK All Companies||106||-18||107.92||110.54||89.14|
|18||CF JM Finn Global Opportunities||Global||106||-17||101.59||116.78||89.34|
|19||Axa Rosenborg Japan||Japan||107||-10||95.74||119.9||92.74|
|20||R&M Global Opportunities||Global||108||-16||101.5||120.48||88.1|
|21||BlackRock Global Equity||Global||108||-16||104.44||118.64||87.01|
|22||Marlborough UK Primary Opportunities||UK All Companies||109||-16||11.5||115.87||84.49|
|23||Investec American||North America||111||-26||106.26||12.56||84.22|
|24||IFSL Harewood UK Enhanced Income||UK All Companies||111||-12||104.62||110.93||96.01|
|25||Psigma Global Equity||Global||112||-12||103.02||116.62||93.32|
|26||M&G Recovery||UK All Companies||113||-13||107.41||110.39||95.16|
|27||CF Purisima Global Total Return PCG||Global||114||-15||106.05||120.45||88.92|
|28||St James Place Ethical||Global||114||-15||106.19||118.04||91|
|29||Ecclesiastical Amity International||Global||114||-14||105.98||122.71||87.77|
|30||Cavendish North American||North America||115||-23||105.88||119.51||91.08|
|31||JPM Global Consumer Trends||Global||115||-14||105.85||122.15||88.85|
|32||Aberdeen Ethical World Equity||Global||115||-14||106.09||117.17||92.66|
|33||St James Place High Octane||Global||115||-14||107.09||118.15||91.05|
|34||Baring Global Growth||Global||116||-10||104.98||115.34||95.58|
|35||Schroder Global Climate Change||Global||118||-12||107.55||122.66||89.24|
|36||L&G Global Growth||Global||119||-11||107.74||118.5||93.47|
|37||Schroder QEP Global Active Value||Global||119||-11||109.07||121.31||90.21|
|38||Aviva Investors Global Equity Income||Global||119||-11||105.89||118.32||95.31|
|40||Standard Life UK Opportunities||UK All Companies||123||-17||116.74||131.77||80.18|
|41||Melchoir North American Opportunities||North America||124||-16||106.45||120.83||96.75|
|42||Standard Life UK Smaller Companies||UK Smaller Companies||127||-16||107.23||130.15||91.12|
|43||IFSL Harewood US Enhanced Income||North America||127||-15||103.5||118.82||103.37|
|44||Allianz US Equity||North America||128||-14||108.77||120.15||98.28|
|45||L&G North American||North America||129||-14||105.71||119.28||101.92|
|46||Psigma American||North America||132||-11||109.58||115.47||104.15|
|47||M&G American||North America||132||-11||107.08||122.97||100.53|
|48||Ignis Smaller Companies||UK Smaller Companies||134||-12||112.04||131.13||90.96|
|49||JPM UK Smaller Companies||UK Smaller Companies||138||-15||114.43||132.65||91.19|