Spotting the dogs - the importance of reviewing portfolios & client servicing

User Written by Carl Turner on August 05, 2014.

Spotting the dogs - the importance of reviewing portfolios & client servicing

Investments are all about timing. Back at the end of 2010 commodities looked like a good bet for investment, having risen 20.5% in value over the course of the year. However if you had put all your eggs into the commodities basket at that point, your investments would have performed miserably for the next three years with annual losses of 12.68%, 5.4% and 11.2% in 2013.

As market conditions change, your asset allocation should be adjusted in line. It is proven that funds that are constantly monitored, actively managed and altered according to what is happening in the markets get better results. It sounds obvious, but not all funds are managed equally, in fact there are some real dogs out there.

For almost two decades, Infinity’s investment partner, Bestinvest, has campaigned to raise awareness of poor fund performance. The company’s dedicated research team consistently review funds and shine a spotlight on the worst performers via their 'Spot the Dog' guide. This review is widely recognised as the industry’s definitive guide, naming and shaming those funds that have significantly, and consistently, underperformed. Unsurprisingly, this doesn’t win any popularity awards from fund managers, but it does give Bestinvest’s clients the peace of mind of knowing that they are investing in a company which takes its responsibilities seriously and diligently manages its clients’ investments so that their money is working as hard as it can.

I recently met with a client who was holding M&G Recovery, a fund which has consistently underperformed against its benchmark. Although this fund has been highlighted in Bestinvest’s 'Spot the Dog' publication, my client was unaware that he was holding a 'dog' fund, in fact, he thought that the fund was still performing as strongly as it was when it was first recommended to him. In consultation with Bestinvest, we were able to make the necessary adjustments to his portfolio to throw the dog out and transfer his investment to better performing funds.

As a professional financial advisor, part of my job is to carry out a regular review of my client’s financial affairs to make sure that the level of risk their investments are exposed to and the strategy employed is still correct for their needs at any given time. As their needs change, or the performance of their investments comes into question, assets can be reallocated to ensure that they remain on track to achieve their long-term goals at all times.

Carl Turner

Carl Turner

Posted on August 05, 2014 in Investments.