80-20 Investor Best of the Best Selection – August 2016 Update

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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