Based on an average of the funds performance over a 5 year and 10 year period the worst performing billion pound fund was ‘Abbey Equity’. The fund has over £1.2billion worth of investment trusted to it by pension savers yet it only manages to produce a 5 year gross return of 9.4%. To understand this in monetary terms an investment of£1,000 would procure a cumulative figure of £1,094 over the 5 years.

Similarly, self-proclaimed ‘Pension Specialists’, Scottish Life have two funds in the top 10 worst performing billion pound funds. The Royal London Group’s ‘Scottish Life Managed’ fund holds over £2.2billion which produces a pathetic 5 year annual growth rate (AGR) of 1.9%. In monetary terms an investor trusting £1,000 in this fund over a 5 year period would see their investment grow by £19 annually. Unbelievably, this is not Scottish Life’s worst performing fund over 5 years. Their ‘Scottish Life Property’ fund holding over £1.1billion accumulates a negative 5 year AGR figure of -3.4%.

The figures associated with the previous list continue to worsen over a 10 year period with negative AGR (%) being applied to many of these billion pound funds. It is staggering that these big firms are able to perform so badly and yet continue to hold a strong position in the pensions market.

A useful indicator of how well a fund is performing is its peer rating. This is a ranking based on its performance in relation to other funds in its category. It is a telling sign that almost all these billion pound funds are ranked below average when compared to their peers. ‘Clerical Medical Balanced’ has one of the largest pension funds available with over £2.4 billion. However, despite this it falls down against its peers ranking 32/38 over a 5 year period and 15/16 over a 10 year period. It is disturbing to think that a large percentage of the cumulative figure for this category is invested in one of the worst performing pensions in the market. Clerical Medical possibly shows the worst financial competitive activity but other big brands such as HSBC also suffer from this. In one of the biggest categories of pension funds ‘HSBC Life (UK) Pen Balanced’ which holds a total of £1,008.2 million is ranked only 103/133 based on its 5 year performance and 35/74 when considering its 10 year performance.

With figures like these it is difficult to understand why consumers are willing to keep their money in funds which are being dramatically out performed by their peers. Pension investors holding investments in this huge fund should not be subject to such poor performance and should be made aware of the options that are available to them in order to improve their long term investment prospects.