Scottish asset management firms have been identified as poor investment performers in a new report.

Spot the Dog, a report conducted by Bestinvest by Evelyn Parnters which analyses fund performance across the globe, found that Ballie Gifford and Martin Curries, both Scottish asset managers, are high in their list ranking  poor investment performance.

Dog funds – investment firms that have delivered worse returns than the market it invests in for three consecutive 12 month periods, have been down a further 44% according to the report, amounting to £53.4bn of money from investors year-on-year.

Despite the AI boom at the end of 2023 improving the US stock market, the Spot the Dog report reveals these benefits to be narrow, only helping already strong performers.

Renewable and sustainability initiatives also suffered as oil and gas soared during the energy crisis spurred on by the war in Ukraine. These funds make up 20% of the Spot the Dog global list of poor performing funds, though these might recover.

It is important to note that the report covers past patterns, and does not necessarily represent what the future may hold for these funds.

“The high number of funds badged variously as sustainable or responsible that feature in the latest Spot the Dog report is likely in part down to the stellar performance of oil and gas stocks in 2021-22,” Jason Hollands, managing director of Bestinvest, said, as reported by Insider.

“Compare this to the alternative and renewable energy market, which fell out of favour during the post-pandemic surge in energy demand, and the story is very different – however, we expect the number of ESG funds to reduce in the next couple of reports as the effect of surging energy stocks drops out of the data.”

Similarly, while certain markets boom, not all are able to benefit.

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The rise in AI saw prolific highs for companies participating in the AI race, such as Nvidia and Microsoft, but this increase in performance was narrow and did not penetrate the wider market.

The top ten worse performing funds overall, and their three-year underperformance compared to the market benchmark, are as follows:

1. Artemis Positive Future Fund -71%
2. Baillie Gifford Global Discovery Fund -65%
3. FTF Martin Currie Japan Equity -64%
4. AXA Act People & Planet Equity Fund -53%
5. Aegon Sustainable Equity -52%
6. IFSL Marlborough Global Innovation Fund -51%
7. L&G Future World Sustainable UK Equity Focus -51%
8. Baillie Gifford Japanese Smaller Coms Fund 047%
9. FSSA Japan Focus Fund -47%

“Funds can stumble for a myriad of different reasons, from poor decision making or a run of bad luck to instability in the team or because the fund has a style or process no longer favoured by recent market trends,” Hollands said.

“Identifying whether a fund is struggling with short-term challenges that will later pass, or more deep-rooted issues with long-term consequences is vital for investors considering whether to remove an investment from their portfolio.”