Commentary
Not too much has changed within the BOTB this month. 13 funds from last month's list of 26 remain the same, as does the BOTB's overall equity exposure (which remains fairly cautious at around 40%). Despite the low equity exposure during a month when equities posted strong gains (the FTSE 100 rose 2.89% while the S&P 500 rose 1.79%) the BOTB selection performed well.
The strong performance of the BOTB selection meant that the average return for March was 2.08% versus 1.52% for the average professionally managed fund from the Mixed Investment 40-85% Shares sector and 1.2% for the average fund in the Mixed Investment 20-60% Shares sector.
From last month's selection, the best performers were M&G Global Listed Infrastructure and First State Global Listed Infrastructure which both followed up strong performances in February with even stronger performances in March (up 3.25% and 3.95% respectively). Global REITS (real estate) continued to perform well, with Standard Life Investments Global REIT posting a gain of 5%, benefiting from investors' desire for higher yields (as bond yields tumbled). The top performer was in fact AXA Sterling Index Linked Bond which rose a staggering 6.99% during March which illustrates how the BOTB bond exposure boosted the overall selection's average return.
Only two funds failed to make a profit last month and they were Premier Global Infrastructure Income and FP Henderson Rowe FTSE RAFI Emerging Markets, but both fell by only -0.1%.
Given the consistencies between the new BOTB and last month’s BOTB it's not surprising that there is still no Japanese or European equity exposure. However, there is an increased fixed interest (bond) exposure, particularly to UK fixed interest and gilts. The latter two have benefited from a lack of direct exposure to fluctuations in the value of the pound but also from the strong global rally in bonds. Global bond funds did perform well during March but fluctuations in the value of the pound hampered their returns which perhaps explains why domestic bonds have gained more of a foothold this month.
The BOTB now has 30 funds (up from 26 last month). With the volatility in markets still elevated it remains prudent to keep an eye on the weekly updates of the BFBS tables given that the BOTB is updated once a month.
At the foot of this article you can see how the 80-20 Investor selection has outperformed the professional fund managers as well as the market since its launch four and a half years ago.
Below I list this month's selection in full with the 13 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.
April'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)
| Name | Sector | ISIN Code | Risk |
| Aberdeen Emerging Markets Bond | Global Emerging Markets Bond | GB00B5L9HN22 | Medium risk |
| Allianz Gilt Yield | UK Gilts | GB0031383283 | Low risk |
| AXA Sterling Index Linked Bond | UK Index Linked Gilts | GB00B02Y6B22 | Medium risk |
| Baillie Gifford Emerging Markets Leading Companies | Global Emerging Markets | GB00B06HZN29 | High risk |
| Baillie Gifford Investment Grade Bond | Sterling Corporate Bond | GB0030816481 | Low risk |
| BlackRock Asia | Asia Pacific Excluding Japan | GB00B7VS8S56 | High risk |
| BlackRock Emerging Markets | Global Emerging Markets | GB00B4R9F681 | High risk |
| BMO Pacific Equity | Asia Pacific Excluding Japan | GB0033143115 | High risk |
| Fidelity China Consumer | China/Greater China | GB00B82ZSC67 | High risk |
| Fidelity Global Dividend | Global Equity Income | GB00B7GJPN73 | Medium risk |
| Fidelity Global Enhanced Income | Global Equity Income | GB00BD1NLJ41 | Medium risk |
| Fidelity Global Property | Property Other | GB00B7K2NZ09 | High risk |
| First State Diversified Growth | Flexible Investment | GB00BVXC2S15 | Medium risk |
| First State Global Listed Infrastructure | Global | GB00B24HJL45 | High risk |
| HSBC UK Gilt Index | UK Gilts | GB00B4581C50 | Low risk |
| Janus Henderson Fixed Interest Monthly Income | Sterling Strategic Bond | GB0001920486 | Low risk |
| Janus Henderson Preference & Bond | Sterling Strategic Bond | GB0007535866 | Low risk |
| Janus Henderson Strategic Bond | Sterling Strategic Bond | GB0007495293 | Low risk |
| L&G Multi-Asset Target Return | Targeted Absolute Return | GB00BD97XY71 | Medium risk |
| LF Seneca Diversified Growth | Mixed Investment 40-85% Shares | GB00B7FPW579 | Medium risk |
| LF Seneca Diversified Income | Mixed Investment 20-60% Shares | GB00B7JTF560 | Low risk |
| M&G Global Listed Infrastructure | Global | GB00BF00R928 | Medium risk |
| Newton Asian Income | Asia Pacific Excluding Japan | GB00B0MY6Z69 | Medium risk |
| Premier Global Infrastructure Income | Global Equity Income | GB0031637738 | High risk |
| Royal London Index Linked | UK Index Linked Gilts | GB00B8DDWW71 | Medium risk |
| Santander Sterling Government Bond | UK Gilts | GB00BSTLRD18 | Low risk |
| Schroder Global Cities Real Estate Income | Property Other | GB00B50MLC91 | High risk |
| Standard Life Investments Emerging Market Debt | Global Emerging Markets Bond | GB00B8K56P77 | Low risk |
| Standard Life Investments Global REIT | Property Other | GB00B7MR5W47 | High risk |
| Standard Life Investments UK Gilt | UK Gilts | GB00B6WZXS38 | Low risk |
April's Best of the Best Selection - (grouped by risk)
Here is April's shortlist grouped by their risk category (funds unchanged from last month are in black while new additions are in green):
| Name | Sector | ISIN Code | Risk |
| Allianz Gilt Yield | UK Gilts | GB0031383283 | Low risk |
| Baillie Gifford Investment Grade Bond | Sterling Corporate Bond | GB0030816481 | Low risk |
| HSBC UK Gilt Index | UK Gilts | GB00B4581C50 | Low risk |
| Janus Henderson Fixed Interest Monthly Income | Sterling Strategic Bond | GB0001920486 | Low risk |
| Janus Henderson Preference & Bond | Sterling Strategic Bond | GB0007535866 | Low risk |
| Janus Henderson Strategic Bond | Sterling Strategic Bond | GB0007495293 | Low risk |
| LF Seneca Diversified Income | Mixed Investment 20-60% Shares | GB00B7JTF560 | Low risk |
| Santander Sterling Government Bond | UK Gilts | GB00BSTLRD18 | Low risk |
| Standard Life Investments Emerging Market Debt | Global Emerging Markets Bond | GB00B8K56P77 | Low risk |
| Standard Life Investments UK Gilt | UK Gilts | GB00B6WZXS38 | Low risk |
| Aberdeen Emerging Markets Bond | Global Emerging Markets Bond | GB00B5L9HN22 | Medium risk |
| AXA Sterling Index Linked Bond | UK Index Linked Gilts | GB00B02Y6B22 | Medium risk |
| Fidelity Global Dividend | Global Equity Income | GB00B7GJPN73 | Medium risk |
| Fidelity Global Enhanced Income | Global Equity Income | GB00BD1NLJ41 | Medium risk |
| First State Diversified Growth | Flexible Investment | GB00BVXC2S15 | Medium risk |
| L&G Multi-Asset Target Return | Targeted Absolute Return | GB00BD97XY71 | Medium risk |
| LF Seneca Diversified Growth | Mixed Investment 40-85% Shares | GB00B7FPW579 | Medium risk |
| M&G Global Listed Infrastructure | Global | GB00BF00R928 | Medium risk |
| Newton Asian Income | Asia Pacific Excluding Japan | GB00B0MY6Z69 | Medium risk |
| Royal London Index Linked | UK Index Linked Gilts | GB00B8DDWW71 | Medium risk |
| Baillie Gifford Emerging Markets Leading Companies | Global Emerging Markets | GB00B06HZN29 | High risk |
| BlackRock Asia | Asia Pacific Excluding Japan | GB00B7VS8S56 | High risk |
| BlackRock Emerging Markets | Global Emerging Markets | GB00B4R9F681 | High risk |
| BMO Pacific Equity | Asia Pacific Excluding Japan | GB0033143115 | High risk |
| Fidelity China Consumer | China/Greater China | GB00B82ZSC67 | High risk |
| Fidelity Global Property | Property Other | GB00B7K2NZ09 | High risk |
| First State Global Listed Infrastructure | Global | GB00B24HJL45 | High risk |
| Premier Global Infrastructure Income | Global Equity Income | GB0031637738 | High risk |
| Schroder Global Cities Real Estate Income | Property Other | GB00B50MLC91 | High risk |
| Standard Life Investments Global REIT | Property Other | GB00B7MR5W47 | 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 Investor Best of the Best list are listed below. Many of them remain in the Best funds by Sector selection:
| Name | Sector | ISIN Code | Risk |
| Baillie Gifford Emerging Markets Bond | Global Emerging Markets Bond | GB00B39RMQ20 | Medium risk |
| BlackRock European Absolute Alpha | Targeted Absolute Return | GB00B4Y62W78 | Low risk |
| First State Emerging Markets Bond | Global Emerging Markets Bond | GB00B6R3H571 | Low risk |
| FP Henderson Rowe FTSE RAFI Emerging Markets | Global Emerging Markets | GB00B4TW6408 | High risk |
| HSBC Global Property | Property Other | GB00B28PP161 | Medium risk |
| JPM Emerging Markets Income | Global Emerging Markets | GB00B56DF680 | High risk |
| L&G Emerging Markets Government Bond (US$) Index | Global Emerging Markets Bond | GB00B7MJV331 | Low risk |
| Merian Global Strategic Bond | Global Bonds | GB00B1XG8G39 | Low risk |
| Royal London International Government Bond | Global Bonds | GB00B45XHL18 | Low risk |
| Standard Life Investments Global Real Estate | Property Other | GB00B774LD38 | Low risk |
| Threadneedle Emerging Market Bond | Global Emerging Markets Bond | GB00B817DW83 | Low risk |
| TIME Investments Commercial Freehold | UK Direct Property | GB00BLRZPX27 | Low risk |
| Vanguard Global Emerging Markets | Global Emerging Markets | GB00BZ82ZY13 | 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 12% (9%)
- Alternatives 18% (19%) - includes absolute return strategies & some bond exposure
- UK Corporate Fixed Interest (i.e UK bonds) 4% (0%)
- Emerging Market Fixed Income 6% (16%)
- North American Equities 7% (6%)*
- European Equities 0% (0%)
- Japanese Equities 0% (0%)
- Property 12% (15%)*
- UK Equities 5% (5%)
- Gilts 12% (8%)
- Cash 5% (4%)
- Emerging market equities 10% (15%)
- Other international equities 3% (3%)
- Asian Equities 6% (0%)
*of the property exposure most is invested in equities of property companies (such as REITs) around the globe. As such they are actually equities and around half of this is based in the US. Therefore the BOTB has an overall US equity exposure of around 12-19% taking this into account.
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 a FTSE 100 tracker fund (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.
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