Moneyspider in the News
09/04/2008
Another bashing for the banks
Times Online
The high street banks have got another
bashing, this time from Moneyspider.com, the fund research group.
It has just released its latest rankings
for the corporate bond fund sector - and the funds managed by the big
banks don't come out well. On a scale of A to E, where A is very good
and E very poor, the banks' bond funds notch up a whole swathe of
Es.
Among those in the firing line are bond
funds from Halifax, HSBC, NatWest, RBS and Lloyds TSB. Tony Ahearne,
of Moneyspider.com, says: "Investors are seduced into going
to the banks because they think the name is trustworthy and they want
to talk to someone about investing. Many older investors were pinning
their hopes on the income from bond funds to support their retirement
and have been particularly badly hit."
He cites as an example the NatWest Extra
Income fund, which has lost 6.4 per cent over one year and 1.3 per cent
over three. Other bond funds from the big banks have lost more than
5 per cent over one year and barely broken even over three, as well
as producing mediocre returns over five. This has landed them with an
E rating - the lowest possible one on the Moneyspider scale.
However while I acknowledge that Moneyspider
has a point and while I am perfectly happy to criticise the big banks
where appropriate I think that, on this occasion, Moneyspider
may be singling out the big banks rather unfairly.
Yes, the banks do have quite a high proportion
of underperforming funds and yes, some of these poor performers are
in the corporate bond sector. But what Moneyspider does not say
is that all corporate bond funds have had a torrid time over the past
couple of years, with most bond funds losing money over both one and
three years.
Since the Moneyspider ratings
measure a fund's performance not just against its sector rivals, but
against all other funds, the FTSE 100 index and against cash, a lot
of bond funds (31 out of more than 100) not just those from the big
banks, have been given an E ranking. Only one bond fund merited an A
rating and one other a B.
Rather than single out the big banks
for letting down investors, it would be more accurate to say that pretty
well all bond funds have performed poorly over one, three and five years.
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