You may have seen articles in the financial press referring to ‘dog’ funds, and wondered what the term means. If so, don’t be concerned, put simply, a ‘dog’ fund is one that is regarded as an under-performing fund.
All investment funds fall into sectors – for example, UK All Companies, Global Equity Income, Japan, UK Smaller Companies or Global Emerging Markets. By classifying funds under these headings, it makes
it much easier to make meaningful comparisons. As well as being compared against each other, they can also be compared against the average performance for all the funds in that sector. If a fund is consistently 10% below the sector average, it can earn the ‘dog’ tag.