Spot the dog

NoviceInvestor1

The 3rd best fund in IA Global over the last 3 years was on the dog list 3 years ago, which probably tells you how useful a list it is when it comes to predicting future performance…

EthicsGradient

talexuser said:

Interestingly, Fundsmith has said it is very strange that equally popular Lindsell Global or Scottish Mortgage is not in the Best dog list considering that they had much worse 3 year results, but just looking at funds and not trusts, and a fixed 3 year snapshot maybe shows the major limitation of these reports. They get them the publicity Best wants though!

BestInvest did say this:

“When two of the most widely held funds are included in the list, run by respected managers, it is important to explore why this may have happened. 

“Fundsmith Equity is a global equity fund that invests in a relatively concentrated portfolio, unconstrained from following a market index. Terry Smith, the manager, targets quality companies that generate high returns on capital and aims to hold them for the long term. The manager has always been clear that he does not seek to trade shares on shorter term factors, chase fads nor make big macro-economic bets. For example, the fund doesn’t own shares in companies that are highly sensitive to the ups and downs of the economic cycle, and has had no exposure to energy, the best-performing sector over the last three years. Neither is the fund heavily invested in technology companies, with the largest exposure being to consumer staples and healthcare.

“Since inception in November 2010, Fundsmith Equity has delivered a total return of 563%, well ahead of the 351% return from the MSCI World Index over the same period, which is important to put the more recent lag in context. Importantly, the philosophy and process of the fund hasn’t changed, and the manager is sticking to an approach that has served investors incredibly well over the longer term. We much prefer fund managers who are clear and consistent in their approach, rather than prone to reacting to shorter term factors.”

Bestinvest’s latest ‘Spot the Dog’ report reveals 170% more funds languishing in the doghouse - check out all the dog funds here - IFA Magazine

Linton

I find the whole concept of "dogs" very misleading.  Most funds simply invest in their chosen sectors which sometimes do well and other times do badly.  Lack of skill in predicting the future has little to do with it,