80-20 Investor Best of the Best Selection – April 2019 Update

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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