Almost £12 billion in assets held by M&G equity funds have experienced chronic underperformance over the last three years, a fund performance analysis by Tilney Bestinvest has warned.
The company is responsible for 66% of the £18 billion in fund assets that the analysis considered to have failed to meet expectation, defined as a 10% underperformance over three consecutive years.
That total was heavily dominated by M&G’s £1.9 billion Global Basics fund, taken over by Jamie Horvat late last year, its £3.2 billion Recovery fund, managed by Tom Dobell (pictured), and its £5.7 billion Global Dividend fund, run by Stuart Rhodes.
While the former two funds remain sizeable, asset flows suggest clients have voted with their feet. M&G Global Basics runs less than a third of its 2010 peak of £6.6 billion, while Recovery is down from a 2011 high above £8 billion, according to Lipper data.
The calculation, part of Tilney Bestinvest’s bi-annual Spot the Dog fund performance report, rated funds over the three years to the end of June. Overall 30 funds had underperformed badly enough to be included, down from 54 six months ago, although the level of assets remained the broadly same.
‘The financial services industry has an unfortunate habit of overpromising and under-delivering,’ said Tilney Bestinvest managing director Jason Hollands.