Bestinvest has branded Jupiter as the worst performing investment house, but the fund manager is disputing the investment adviser's methodology.
Bestinvest's Spot the Dog Autumn 2010 survey, which names and shames the worst performing funds and fund managers found that in total, £13.3bn of investors' money is sitting in dog funds.
To be labelled a "dog" a fund must have fallen short of its benchmark in each of the past three years and by at least 10 per cent over the past three years.
The investment advisers claim Jupiter has the most money in consistently underperforming dog funds: £2.6bn, or 36 per cent of Jupiter's assets. However, a spokesperson for Jupiter said: "In fact, it is 36 per cent of the assets of a selection of our funds which Bestinvest have chosen."
The main Jupiter dog fund identified in the research is the £2.5bn Jupiter Income Trust. A surprise entry to the Bestinvest's kennel club, this fund has suffered in recent years as the fund manager Anthony Nutt's favoured blue-chip defensives have failed to keep up with the broader market rally. Mr Nutt has a good long-term track record - Jupiter Income is 41 per cent ahead of the market over the past decade - but recently tipped too much of his portfolio to underperforming media stocks.
A classic value investor, Mr Nutt is staking his reputation on out-of-favour areas of the market, paying close attention to a company's dividend policy. His portfolio has a 22 per cent holding in financials, and a 19 per cent holding in oil & gas. His latest fact sheet said: "There is scope for significant dividend growth in the next couple of years and this is not currently priced into equities. Since the main component of long-term equity returns comes via dividends and their growth, we believe holding fairly values, internationally diversified businesses paying good-quality dividends is appropriate in this sluggish environment."
The fund is ranked 12th in the UK Equity Income sector and Mr Nutt's loyal investors may hang on another year in hope of improvement. But if performance does not pick up soon, there are plenty of good alternatives, for example, the .
Liontrust Income features in the dog house again. We recommended that investors following a period of poor performance. The fund's new managers, Gary West and James Inglis-Jones, who took over the fund in March 2009, look like they are bringing performance to heel, though; over six months the fund has outperformed, but this is not enough of a track record to attract new money.
Former star manager George Luckraft's AXA Framlington Equity Income and AXA Framlington Monthly Income funds appear on the Dog list for the third time in a row. Shorter term performance has started to pick up but Mr Luckraft still has a lot to prove before he's let off the leash again.
