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

Commentary

Only 10 funds from last month retain their position in September's Best of the Best Selection, the fewest ever. However while the characters may have changed the storyline remains largely familiar. Global bonds remain the largest component of the Selection although this has significantly reduced. Interestingly the exposure to US equities has fallen with Asia (most notably Japan and Chinese equities) being the biggest beneficiaries. This means that this month's Best of the Best Selection once again adds a touch more risk yet is arguably even more diversified across asset classes. We still see a number of managed funds from the Mixed sectors featured which reflects the diversified nature of the portfolio. In terms of equity exposure this is at its highest level for some months.

Although the portfolio seemingly has a moderate direct exposure to equities the 'alternatives' listed will include exposure to equities but via derivatives etc. Unfortunately the opaque 'alternatives' label is a result of some fund managers' inability to fit their fund holdings into one of the Investment Association's official categories. So it's something DIY investors are stuck with.

In terms of performance the 80-20 Investor portfolio largely tracked the market sideways during August yet still finished up 1.6%. 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 over 2 years ago.

A total of 10 funds from August's 30 funds make it into September's selection. Below I list this month's selection in full with the 10 funds that regained their place in black while the new additions are in green.

As usual, I have included the full list sorted alphabetically by name and then by risk category.

September'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
Aberdeen - UK Equity Income	UK Equity Income	GB00B0XWN705	Medium risk
Artemis - Monthly Distribution	Mixed Investment 20%-60% Shares	GB00B6TK3R06	Medium risk
AXA - Sterling Index Linked Bond	UK Index - Linked Gilts	GB00B02Y6C39	High risk
AXA - Sterling Strategic Bond	Sterling Strategic Bond	GB00B02Y6M37	Low risk
Baillie Gifford - European	Europe Excluding UK	GB0006057284	Medium risk
Baillie Gifford - Japanese	Japan	GB0006010838	High risk
Barclays - Sterling Bond	Sterling Strategic Bond	GB00B72Y6K08	Low risk
BlackRock - Asia Special Situations	Asia Pacific Excluding Japan	GB00BJGZZ065	High risk
Fidelity - Global High Yield	Sterling High Yield	GB00B7K7SQ18	Low risk
Fidelity - Multi Asset Income	Mixed Investment 0%-35% Shares	GB00BGFBMY77	Low risk
Franklin - UK Equity Income	UK Equity Income	GB00B7DRD638	Medium risk
Henderson - China Opportunities	China/Greater China	GB0031860934	High risk
HSBC - Corporate Bond	Sterling Corporate Bond	GB00B85KC152	Low risk
IFSL - Brooks Macdonald Defensive Capital	Targeted Absolute Return	GB00B61MR835	Low risk
JPM - Asia	Asia Pacific Excluding Japan	GB0030879695	High risk
Jupiter - Global Emerging Markets	Global Emerging Markets	GB00B4JVHP59	High risk
Jupiter - Income Trust	UK Equity Income	GB0004791389	Medium risk
Man GLG - Corporate Bond	Global Bonds	GB00B0118B85	Medium risk
Man GLG - Japan Core Alpha	Japan	GB00B3F46Y30	High risk
Marks & Spencer - High Income	Sterling Strategic Bond	GB0030013345	Low risk
Marlborough - European Multi-Cap	Europe Excluding UK	GB0001719730	Medium risk
Premier - Global Utilities Income	Global Equity Income	GB0031637738	Medium risk
Royal London - Sustainable Managed Growth Trust	Mixed Investment 0%-35% Shares	GB00B8H7XS88	Low risk
Schroder - Global Real Estate Securities Income	Property	GB00B50MLC91	High risk
Threadneedle - China Opportunities	China/Greater China	GB00B1PRW734	High risk
Threadneedle - Dynamic Real Return	Targeted Absolute Return	GB00BWWC6P48	Low risk
Threadneedle - Emerging Market Bond	Global Emerging Market Bond	GB00B817DW83	Medium risk
Threadneedle - European High Yield Bond	Global Bonds	GB00B6RRFW23	Medium risk
VT - De Lisle America	North America	GB00B3QF3G69	High risk

 

September's Best of the Best Selection - (grouped by risk)

Here is September'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
Barclays - Sterling Bond	Sterling Strategic Bond	GB00B72Y6K08	Low risk
AXA - Sterling Strategic Bond	Sterling Strategic Bond	GB00B02Y6M37	Low risk
Marks & Spencer - High Income	Sterling Strategic Bond	GB0030013345	Low risk
Fidelity - Multi Asset Income	Mixed Investment 0%-35% Shares	GB00BGFBMY77	Low risk
Royal London - Sustainable Managed Growth Trust	Mixed Investment 0%-35% Shares	GB00B8H7XS88	Low risk
HSBC - Corporate Bond	Sterling Corporate Bond	GB00B85KC152	Low risk
IFSL - Brooks Macdonald Defensive Capital	Targeted Absolute Return	GB00B61MR835	Low risk
Threadneedle - Dynamic Real Return	Targeted Absolute Return	GB00BWWC6P48	Low risk
Fidelity - Global High Yield	Sterling High Yield	GB00B7K7SQ18	Low risk
Marlborough - European Multi-Cap	Europe Excluding UK	GB0001719730	Medium risk
Baillie Gifford - European	Europe Excluding UK	GB0006057284	Medium risk
Threadneedle - European High Yield Bond	Global Bonds	GB00B6RRFW23	Medium risk
Premier - Global Utilities Income	Global Equity Income	GB0031637738	Medium risk
Man GLG - Corporate Bond	Global Bonds	GB00B0118B85	Medium risk
Threadneedle - Emerging Market Bond	Global Emerging Market Bond	GB00B817DW83	Medium risk
Artemis - Monthly Distribution	Mixed Investment 20%-60% Shares	GB00B6TK3R06	Medium risk
Aberdeen - UK Equity Income	UK Equity Income	GB00B0XWN705	Medium risk
Jupiter - Income Trust	UK Equity Income	GB0004791389	Medium risk
Franklin - UK Equity Income	UK Equity Income	GB00B7DRD638	Medium risk
Jupiter - Global Emerging Markets	Global Emerging Markets	GB00B4JVHP59	High risk
Henderson - China Opportunities	China/Greater China	GB0031860934	High risk
JPM - Asia	Asia Pacific Excluding Japan	GB0030879695	High risk
BlackRock - Asia Special Situations	Asia Pacific Excluding Japan	GB00BJGZZ065	High risk
Threadneedle - China Opportunities	China/Greater China	GB00B1PRW734	High risk
Baillie Gifford - Japanese	Japan	GB0006010838	High risk
Man GLG - Japan Core Alpha	Japan	GB00B3F46Y30	High risk
Schroder - Global Real Estate Securities Income	Property	GB00B50MLC91	High risk
VT - De Lisle America	North America	GB00B3QF3G69	High risk
AXA - Sterling Index Linked Bond	UK Index - Linked Gilts	GB00B02Y6C39	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
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
L&G - Mixed Investment 0-35%	Mixed Investment 0%-35% Shares	GB00B8KRCM23	Low risk
Threadneedle - Defensive	Mixed Investment 0%-35% Shares	GB0032010042	Low 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
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
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 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 22% (27%)
• Alternatives/Other 18%  (17%)
• UK Corporate Fixed Interest (i.e UK bonds) 7% (8%)
• North American Equities 5% (10%)
• European Equities 8% (5%)
• Japanese Equities 7% (4%)
• Property 4% (7%)
• UK Equities 12% (11%)
• Cash (0%)
• Asian equities 5% (4%)
• Asia Pacific Emerging equities 12% (7%)

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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