Pity the City’s fund managers. As if their jobs weren’t stressful enough, twice a year they must await the Spot the Dog report, and with it the potential for an ugly blot on their otherwise type-A CVs.
The report, which its glint-eyed publisher Bestinvest dubs “the guide fund managers would love to ban”, has set about ‘exposing’ underperforming funds since 1994. This longevity owes much to the way it captures the imagination of investment professionals and retail punters like no star-based rating scale can. If you’re a dog, then you’re a dog. Perhaps not for life, but the label still smarts.
Given the simplicity of the report’s screening criteria, most money managers will know whether a trip to the kennel is imminent. To find itself in the pound, a fund must first fail to beat its benchmark over three consecutive 12-month periods, and second underperform the benchmark by 5 per cent or more over the entire three-year period. Such protracted poor performance rarely goes unnoticed.