Commentary
Once again just over half of this month's 80-20 Investor Best of the Best Selection retained their place from last month's shortlist. Once again Global bonds still account for the largest component of the portfolio and although the portfolio has a low direct exposure to equities the 'alternatives' listed will include exposure to equities but via derivatives etc. The 80-20 Investor portfolio performed well during July, finishing the month up over 3% versus 1.82% on the FTSE 100 after the Index had a very strong rally.
This month the Best of the Best Selection has added a touch more risk by moving out of UK Gilts and favouring Asian and Emerging Market equities. They now equate to around 11% of the portfolio in total. Time will tell whether such a bold move will be profitable. Meanwhile we continue to see more funds with direct UK equity exposure creeping in. These funds have a large cap focus and so have benefited from the weak pound. The key portfolio theme remains diversification across asset classes and geography. As a result we once again see a number of managed funds from the Mixed sectors featured in the portfolio. There is still a strong emphasis on global assets which served the portfolio well as the pound fell post-Brexit. If the pound weakens further the portfolio should continue to benefit. At the foot of this article you can see how the 80-20 Investor Portfolio has continued to outperform the professional fund managers as well as the market since its launch 2 years ago.
A total of 17 funds from July's 31 funds make it into August's selection. Below I list this month's selection in full with the 17 funds that regained their place in black while the new additions are in green.
Just as last time, I have included the full list sorted alphabetically by name and then by risk category.
August's Best of the Best Selection - (A-Z by fund name)
(funds unchanged from last month are in black while new additions are in green)
| Fund | Sector | ISIN Code | Risk Level |
| Allianz - Emerging Markets Equity | Global Emerging Markets | GB00B0WDH832 | High risk |
| Allianz - RiskMaster Conservative Multi Asset | Mixed Investment 20%-60% Shares | GB00B7V78Q03 | Medium risk |
| AXA - Framlington Japan | Japan | GB00BRJZVR88 | High risk |
| AXA - Sterling Corporate Bond | Sterling Corporate Bond | GB00B0T9V714 | Low risk |
| AXA - Sterling Strategic Bond | Sterling Strategic Bond | GB00B02Y6M37 | Low risk |
| Barclays - Sterling Bond | Sterling Strategic Bond | GB00B72Y6K08 | Low risk |
| BlackRock - Global Property Securities Equity Tracker | Property | GB00B5BFJG71 | High risk |
| CF Canlife - Global Bond | Global Bonds | GB00B4LW2X97 | Medium risk |
| CF Canlife - North American | North America | GB00B73N3278 | High risk |
| Fidelity - Asia Pacific Opportunities | Asia Pacific Excluding Japan | GB00BQ1SWL90 | High risk |
| Fidelity - Global High Yield | Sterling High Yield | GB00B7K7SQ18 | Medium risk |
| First State - Global Listed Infrastructure | Global | GB00B24HJC53 | High risk |
| Franklin - UK Equity Income | UK Equity Income | GB00B7DRD638 | Medium risk |
| HSBC - Open Global Distribution | Mixed Investment 20%-60% Shares | GB00B7JK0545 | Medium risk |
| IFSL - Brooks Macdonald Defensive Capital | Targeted Absolute Return | GB00B61MR835 | Low risk |
| Invesco Perpetual - Asian Equity Income | Asia Pacific Excluding Japan | GB00B8N44S01 | High risk |
| Jupiter - Income Trust | UK Equity Income | GB0004791389 | Medium risk |
| L&G - Managed Monthly Income Trust | Sterling Corporate Bond | GB00B0CNHQ18 | Low risk |
| L&G - Mixed Investment 0-35% | Mixed Investment 0%-35% Shares | GB00B8KRCM23 | Low risk |
| Marks & Spencer - High Income | Sterling Strategic Bond | GB0030013345 | Low risk |
| Marlborough - European Multi-Cap | Europe Excluding UK | GB0001719730 | Medium risk |
| McInroy & Wood - Balanced | Mixed Investment 40%-85% Shares | GB00B7RRJ163 | Medium risk |
| Schroder - Global Real Estate Securities Income | Property | GB00B50MLC91 | High risk |
| Schroder - UK Corporate Bond | Sterling Corporate Bond | GB0009379370 | Low risk |
| Schroder - US Mid Cap | North America | GB00B7LDLV43 | High risk |
| Standard Life Investments - Global Emerging Markets Equity | Global Emerging Markets | GB00B7ZMKJ84 | High risk |
| Thesis - Climate Assets | Mixed Investment 40%-85% Shares | GB00B5NB7L44 | Medium risk |
| Threadneedle - Defensive | Mixed Investment 0%-35% Shares | GB0032010042 | Low risk |
| Threadneedle - Dynamic Real Return | Targeted Absolute Return | GB00BWWC6P48 | Low risk |
| Wise Investments - Evenlode Income | UK All Companies | GB00B40Y5R17 | Medium risk |
August's Best of the Best Selection - (grouped by risk)
Here is August's shortlist grouped by their risk category (funds unchanged from last month are in black while new additions are in green):
| Fund | Sector | ISIN Code | Risk Level |
| Schroder - UK Corporate Bond | Sterling Corporate Bond | GB0009379370 | Low risk |
| AXA - Sterling Corporate Bond | Sterling Corporate Bond | GB00B0T9V714 | Low risk |
| L&G - Managed Monthly Income Trust | Sterling Corporate Bond | GB00B0CNHQ18 | Low risk |
| Barclays - Sterling Bond | Sterling Strategic Bond | GB00B72Y6K08 | Low risk |
| AXA - Sterling Strategic Bond | Sterling Strategic Bond | GB00B02Y6M37 | Low risk |
| L&G - Mixed Investment 0-35% | Mixed Investment 0%-35% Shares | GB00B8KRCM23 | Low risk |
| Threadneedle - Defensive | Mixed Investment 0%-35% Shares | GB0032010042 | Low risk |
| Marks & Spencer - High Income | Sterling Strategic Bond | GB0030013345 | Low risk |
| Threadneedle - Dynamic Real Return | Targeted Absolute Return | GB00BWWC6P48 | Low risk |
| IFSL - Brooks Macdonald Defensive Capital | Targeted Absolute Return | GB00B61MR835 | Low risk |
| Marlborough - European Multi-Cap | Europe Excluding UK | GB0001719730 | Medium risk |
| Thesis - Climate Assets | Mixed Investment 40%-85% Shares | GB00B5NB7L44 | Medium risk |
| McInroy & Wood - Balanced | Mixed Investment 40%-85% Shares | GB00B7RRJ163 | Medium risk |
| Wise Investments - Evenlode Income | UK All Companies | GB00B40Y5R17 | Medium risk |
| CF Canlife - Global Bond | Global Bonds | GB00B4LW2X97 | Medium risk |
| Allianz - RiskMaster Conservative Multi Asset | Mixed Investment 20%-60% Shares | GB00B7V78Q03 | Medium risk |
| HSBC - Open Global Distribution | Mixed Investment 20%-60% Shares | GB00B7JK0545 | Medium risk |
| Franklin - UK Equity Income | UK Equity Income | GB00B7DRD638 | Medium risk |
| Jupiter - Income Trust | UK Equity Income | GB0004791389 | Medium risk |
| Fidelity - Global High Yield | Sterling High Yield | GB00B7K7SQ18 | Medium risk |
| Fidelity - Asia Pacific Opportunities | Asia Pacific Excluding Japan | GB00BQ1SWL90 | High risk |
| Standard Life Investments - Global Emerging Markets Equity | Global Emerging Markets | GB00B7ZMKJ84 | High risk |
| Allianz - Emerging Markets Equity | Global Emerging Markets | GB00B0WDH832 | High risk |
| Schroder - Global Real Estate Securities Income | Property | GB00B50MLC91 | High risk |
| Invesco Perpetual - Asian Equity Income | Asia Pacific Excluding Japan | GB00B8N44S01 | High risk |
| AXA - Framlington Japan | Japan | GB00BRJZVR88 | High risk |
| Schroder - US Mid Cap | North America | GB00B7LDLV43 | High risk |
| First State - Global Listed Infrastructure | Global | GB00B24HJC53 | High risk |
| CF Canlife - North American | North America | GB00B73N3278 | High risk |
| BlackRock - Global Property Securities Equity Tracker | Property | GB00B5BFJG71 | High risk |
The funds that dropped out of the Best of the Best Selection
For reference the funds from last month that dropped out of the 80-20 Best of the Best list are listed below. Many of them remain in the Best funds by Sector selection:
| Fund | Sector | ISIN Code | Risk Level |
| CF Canlife - Global Equity Income | Global Equity Income | GB00B5W34S70 | Medium risk |
| F&C - Emerging Markets | Global Emerging Markets | GB0005751002 | High risk |
| Fidelity - Multi Asset Allocator Defensive | Mixed Investment 0%-35% Shares | GB00B8YQD220 | Low risk |
| JPM - Emerging Markets Income | Global Emerging Markets | GB00B56DF680 | High risk |
| JPM - Japan | Japan | GB0030879471 | High risk |
| Jupiter - Absolute Return | Targeted Absolute Return | GB00B5129B32 | Medium risk |
| L&G - Sterling Corporate Bond Index | Sterling Corporate Bond | GB00B4M01C47 | Low risk |
| McInroy & Wood - Income | Mixed Investment 40%-85% Shares | GB00B8KQRW41 | Medium risk |
| Threadneedle - Emerging Market Bond | Global Emerging Market Bond | GB00B817DW83 | High risk |
| Threadneedle - Global Bond | Global Bonds | GB00B8C2M701 | Medium risk |
| Threadneedle - Sterling Bond | UK Gilts | GB00B7SH5738 | Medium risk |
| UBS - Sterling Corporate Bond Indexed | Sterling Corporate Bond | GB00B9973R25 | Low risk |
| Vanguard - LifeStrategy 20% Equity | Mixed Investment 0%-35% Shares | GB00B4NXY349 | Low risk |
| Vanguard - UK Inflation Linked Gilt Index | UK Index - Linked Gilts | GB00B45Q9038 | High risk |
The Asset mix
The current asset mix of the new Best of the Best Selection is shown below with last month's figures in brackets:
- Global Fixed Interest 27% (22%)
- Alternatives/Other 17% (21%)
- UK Corporate Fixed Interest (i.e UK bonds) 8% (11%)
- North American Equities 10% (9%)
- European Equities 5% (7%)
- Japanese Equities 4% (9%)
- Property 7% (7%)
- UK Equities 11% (7%)
- Cash 0% (0%)
- Asian equities 4% (0%)
- Emerging market equities 7% (0%)
- UK Gilts 0% (7%)
- Other international equities 0% (0%)
80-20 Investor's outperformance continues
As you know the Best of the Best Selection is the shortlist of the best funds highlighted by our 80-20 Investor algorithm split into high, medium and low risk categories. This shortlist is updated at the start of every month.
The green line in the chart below (click to enlarge) shows how a portfolio would have performed since inception (in August 2014) if it had been split equally between the Best of the Best Selection funds and then switched each month when each new shortlist was published. I have also charted the performance against that of the FTSE 100 (the black line) and the average cautious managed fund (blue line) and the average managed fund with up to 85% equity exposure (red line). In reality the 80-20 Investor's asset allocation typically lies between these two as it usually has 60-85% exposure to equities at any one time. So they provide a good comparison of how fund managers with a similar remit have fared over the same period.
As you can see, since launch in August 2014 the 80-20 Investor portfolio has HUGELY outperformed the average managed fund and the market. The large spike in performance in the 80-20 Investor portfolio on the right hand side of the chart is where the portfolio rallied after the Brexit referendum while global markets plummeted.
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