There is a pack of reasons why funds go through periods of poor performance. Deciding whether to stay invested in a fund or switch is all about assessing its potential and whether you could do better elsewhere.
Spot the Dog lists the runts of the litter, but it’s not a list of funds that should automatically be sold. This is because we analyse past performance, which isn’t necessarily a guide to how a fund will perform in the future. There may be good reason to believe a down-and-out dog fund featured in the report will get back on its feet.
For example, there are many different approaches to investing. Some funds adopt styles that are out of favour with the markets but might come back in soon. Some managers are suited to tougher times, others to rising markets.
Fund management companies might be taking action to improve performance. They could have appointed a new fund manager with a strong record elsewhere, or are taking steps to change the investment approach. The point is even funds that have historically underperformed could turn performance around.
While Spot the Dog isn’t a sell list, funds appearing do require further investigation. If you look at a fund’s prospects and can’t see any way performance will turn around, it may make sense to switch to a best-of-breed alternative.
As a dog whisperer helps with problem dogs, our friendly team can help with any concerns you have about your investments.
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