Scottish Widows secretly moves billions into dud funds Other customers held Scottish Widows pensions sold by a financial adviser, or were signed up to a retirement scheme in a Lloyds or Halifax branch. This newspaper understands that senior executives at Scottish Widows took a "business decision" to switch savers from risky funds to slow-and-steady alternatives. The company decided that some of its investments were too "volatile" for basic pension savings. Instead, Scottish Widows wanted to provide savers with returns that were "more closely matched to the benchmark." This is investment jargon for copying the average growth of the entire UK stock market, rather than trying to beat it. The funds chosen for this task were Halifax UK Growth, Scottish Widows UK Growth and Halifax All Share Tracker. Yet analysis of these funds' track records found that they provided poor value for money. Despite charges deducting as much as £161 from each £10,000 saved each year, the funds have performed unspectacularly. For instance, the Halifax UK Growth fund ranks among the 10 worst UK funds available, according to specialist broker FundExpert.co.uk. It was classified as "ugly" in the broker's tests, which used a mathematical formula to analyse consistency over the past 10 years. Some £1.2bn was moved into the fund in 12 months, making it the second most popular UK fund after the BlackRock UK Equity Tracker, according to figures shown to Your Money. The Scottish Widows UK Growth Fund took in the third largest amount over the past 12 months, attracting £712m. A lump sum of £10,000 invested 10 years ago would now be worth £17,930, according to FundExpert. Had the money been invested in the best-performing UK fund, Franklin UK Mid Cap, it would have grown to £47,340 - more than doubling the return after fees. Scottish Widows insisted that these funds were this year updated to provide steady, low-risk growth. The company hopes to better its hitherto unflattering record. A spokesman said: "What we have done is change our approach to these funds to a lower risk style of equity management, which aims for more consistent performance. We've switched the equity element of some existing life and pension funds into these funds, which has been the principal driver for these increased inflows. In relation to the performance, we have recently made changes to the management of the Halifax UK Growth and the Scottish Widows UK Growth funds, which we believe will achieve greater future investment performance for our customers. Ben Yearsley, head of research at fund broker Charles Stanley, said: "Bank funds are still a no-go area where investments are concerned - in most cases the funds on offer are simply awful. However, the banks have profited from a fantastic distribution network and captive customer base. The final fund that attracted huge amounts of money over the past year was the Halifax UK FTSE All Share Tracker. This fund is run by a computer, rather than a human stock-picker, and simply mirrors the return of all the shares listed on the London Stock Exchange. Halifax commands an enormous 1pc annual fee for this service, which is out of kilter with the going rate. To make matters worse, the bank also runs another "tracker" fund called Scottish Widows Foundation Growth, which has a charge of just 0.11pc a year if bought through Charles Stanley or Hargreaves Lansdown, another broker - a deduction of just £11 on each £10,000 invested, compared with £100. There is no benefit to paying a higher charge on a tracker fund, as the fee only drags on investment growth. Justin Modray, founder of Candid Financial Advice, said: "Halifax has sold its customers bucket loads of Scottish Widows funds in the past. While not all Scottish Widows funds are underachievers, a number are.