What if I have a dog fund?
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.
Don’t sell automatically
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.
Our research team’s top picks
Our research team is highly skilled. They have developed ways to separate the pedigree funds from the mutts, including conducting over 400 interviews a year with fund managers along with both statistical and qualitative analysis.
Alongside the dog funds, we provide our research team’s top fund picks for each sector in the report. Just as you investigate any dog funds you hold before switching though, it’s important to investigate the pedigree picks to see whether they’re right for you and have the potential to perform over the long term.