Posted inEquities

The great global equity fund flop

Equities have inarguably been the best growth trade of recent years, so why have global funds, which supposedly cherry pick the winners, consistently struggled?

Over five years, less than a quarter of 205 global funds with a long enough track record have beaten the FTSE World benchmark, and only 38% have beaten the MSCI World, according to FE Trustnet.

Shocking stats, but this ties in with Tilney Bestinvest’s latest Spot the Dog report which names global equities as the universe with the largest number of ‘dog’ funds – 13 across the IA Global and Global Equity Income sectors, representing 10% of the combined universe.

The report picked out the likes of M&G Global Basics, St James’s Place High Octane, CF JM Finn Global Opportunities and Aberdeen Ethical World Equity, all of which have been present in three consecutive half-yearly reports.

Other, newer entrants in the list – funds which have underperformed for three consecutive years and by more than 10% – included Kennox Strategic Value, St James’s Place Ethical, CF Canlife Global Equity Income and Miton Global Equity.

The report picked out those funds with a bias to emerging markets as those that have performed worse, while the best performers have favoured the US.

Tilney Bestinvest attributes the underperforming global income funds – including Aberdeen World Equity Income, Newton Global Income and BlackRock Global Income – as tripping up on geographical allocation, while mining and energy exposure has been problematic. 

Part of the Bonhill Group.