80-20 Investor Best of the Best Selection – April 2021 Update

Commentary

Usually, as the BOTB adapts to unfolding market trends somewhere between a half and two-thirds of funds remain the same from month to month. It's unusual to see wholesale changes in the BOTB from one month to the next. But if you go back through these monthly summaries you will see that it does occur but only when there is a complete shift in market sentiment. That is what we've experienced since mid-February when the reflation trade gripped markets.

As I explained in April's monthly newsletter, during March "Asian equities and the Nasdaq 100 were dragged down by technology stocks and US-China political tensions the S&P 500, Dow Jones and the German Dax all powered to new all-time highs after a weak start to the month". Meanwhile, value stocks outperformed growth stocks around the world.

Momentum trades that had been outstanding performers over the last 12 months started lagging over the last 6 weeks, while 2020's losers became the new winners. The chart below shows the performance of March's BOTB versus a benchmark constructed by assuming the same asset mix as the BOTB but using the average return achieved by funds within each sector the BOTB is exposed to. That chart also includes February's BOTB for comparison purposes. It shows how the BOTB's growth focus hampered returns over the month, although it was not disastrous as the selection still finished in positive territory. But the outperformance of March's BOTB versus February's BOTB shows how the asset mix had moved away from funds with a growth/technology focus towards value stocks and how that in turn boosted March's BOTB's average return.

Unsurprisingly the move away from growth funds in favour of value/cyclical equity funds continues. Given the acceleration of the reflation trade, only 8 funds from March's BOTB remain in April's BOTB which is one of the lowest numbers for some time. Interestingly the overall asset mix of April's BOTB is not too dissimilar from March's, but it's the funds that have changed with a number of the reflation trade winners that I identified in my recent research piece now making the cut.

The most notable trends this month are an increased exposure to UK equities (now the largest component of the BOTB), especially to smaller companies stocks. Also a reduced exposure to bonds (the lowest for some time) in favour of absolute return funds and multi-asset funds. There is still no place for gilt funds after their dismal performance in recent months. European equities make a return while direct exposure to Chinese equities has now been removed. The overall equity exposure of the BOTB sits around 63%, which is broadly the same as the previous month.

At the foot of this article, you can see how the 80-20 Investor selection continues to outperform the professional fund managers as well as the market since its launch six and a half years ago.

Below I list this month's selection in full with the 8 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
Allianz UK Opportunities	UK All Companies	GB00B8BB9445	High risk
Artemis Global Income	Global Equity Income	GB00B5N99561	Medium risk
Artemis SmartGARP Global Emerging Markets Equity	Global Emerging Markets	GB00BW9HL132	Medium risk
Artemis SmartGARP Global Equity	Global	GB00B2PLJP95	Medium risk
AXA Framlington Managed Income	Sterling Strategic Bond	GB00B7H1PG56	Low risk
Barings Global Agriculture	Specialist	GB00B3B9V927	High risk
BM Brooks Macdonald Defensive Capital	Targeted Absolute Return	GB00B61MR835	Low risk
Courtiers Total Return Cautious Risk	Mixed Investment 20-60% Shares	GB00B1P2K418	Low risk
ES R&M UK Recovery	UK All Companies	GB00B614J053	Medium risk
Fidelity American Special Situations	North America	GB00B89ST706	High risk
Fidelity UK Smaller Companies	UK Smaller Companies	GB00B7VNMB18	High risk
FP Octopus UK Micro Cap Growth	UK Smaller Companies	GB00BYQ7HN43	High risk
FP Pictet Multi Asset Portfolio	Targeted Absolute Return	GB00BVYTTC41	Low risk
Invesco Asian (UK)	Asia Pacific Excluding Japan	GB00B1W7HW60	Medium risk
Invesco Global Emerging Markets (UK)	Global Emerging Markets	GB00B3RW7S64	Medium risk
Invesco Global Smaller Companies (UK)	Global	GB00B3RS8K36	High risk
Invesco High Yield (UK)	Sterling High Yield	GB00B3RW7649	Low risk
Jupiter Income Trust	UK Equity Income	GB0004791389	Medium risk
Marlborough European Multi-Cap	Europe Excluding UK	GB0001719730	High risk
Premier Miton UK Value Opportunities	UK All Companies	GB00B8KV0M06	High risk
Premier Miton Worldwide Opportunities	Flexible Investment	GB0031831133	Medium risk
Schroder Global Equity Income	Global Equity Income	GB00B76V7M69	Medium risk
Schroder High Yield Opportunities	Sterling High Yield	GB00B83RDY83	Low risk
Schroder MM Diversity	Mixed Investment 20-60% Shares	GB00B60CZD52	Low risk
Schroder Monthly Income	Mixed Investment 20-60% Shares	GB00B78ST188	Low risk
Schroder Strategic Bond	Sterling Strategic Bond	GB00B7FPS593	Low risk
Schroder UK Dynamic Absolute Return	Targeted Absolute Return	GB00B3N74T57	Low risk
Schroder UK Smaller Companies	UK Smaller Companies	GB00B76V7Z98	High risk
Schroder US Mid Cap	North America	GB00B7LDLV43	High risk
Wise Funds Limited TB Wise Multi-Asset Growth	Flexible Investment	GB0034272533	Medium 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
AXA Framlington Managed Income	Sterling Strategic Bond	GB00B7H1PG56	Low risk
BM Brooks Macdonald Defensive Capital	Targeted Absolute Return	GB00B61MR835	Low risk
Courtiers Total Return Cautious Risk	Mixed Investment 20-60% Shares	GB00B1P2K418	Low risk
FP Pictet Multi Asset Portfolio	Targeted Absolute Return	GB00BVYTTC41	Low risk
Invesco High Yield (UK)	Sterling High Yield	GB00B3RW7649	Low risk
Schroder High Yield Opportunities	Sterling High Yield	GB00B83RDY83	Low risk
Schroder MM Diversity	Mixed Investment 20-60% Shares	GB00B60CZD52	Low risk
Schroder Monthly Income	Mixed Investment 20-60% Shares	GB00B78ST188	Low risk
Schroder Strategic Bond	Sterling Strategic Bond	GB00B7FPS593	Low risk
Schroder UK Dynamic Absolute Return	Targeted Absolute Return	GB00B3N74T57	Low risk
Artemis Global Income	Global Equity Income	GB00B5N99561	Medium risk
Artemis SmartGARP Global Emerging Markets Equity	Global Emerging Markets	GB00BW9HL132	Medium risk
Artemis SmartGARP Global Equity	Global	GB00B2PLJP95	Medium risk
ES R&M UK Recovery	UK All Companies	GB00B614J053	Medium risk
Invesco Asian (UK)	Asia Pacific Excluding Japan	GB00B1W7HW60	Medium risk
Invesco Global Emerging Markets (UK)	Global Emerging Markets	GB00B3RW7S64	Medium risk
Jupiter Income Trust	UK Equity Income	GB0004791389	Medium risk
Premier Miton Worldwide Opportunities	Flexible Investment	GB0031831133	Medium risk
Schroder Global Equity Income	Global Equity Income	GB00B76V7M69	Medium risk
Wise Funds Limited TB Wise Multi-Asset Growth	Flexible Investment	GB0034272533	Medium risk
Allianz UK Opportunities	UK All Companies	GB00B8BB9445	High risk
Barings Global Agriculture	Specialist	GB00B3B9V927	High risk
Fidelity American Special Situations	North America	GB00B89ST706	High risk
Fidelity UK Smaller Companies	UK Smaller Companies	GB00B7VNMB18	High risk
FP Octopus UK Micro Cap Growth	UK Smaller Companies	GB00BYQ7HN43	High risk
Invesco Global Smaller Companies (UK)	Global	GB00B3RS8K36	High risk
Marlborough European Multi-Cap	Europe Excluding UK	GB0001719730	High risk
Premier Miton UK Value Opportunities	UK All Companies	GB00B8KV0M06	High risk
Schroder UK Smaller Companies	UK Smaller Companies	GB00B76V7Z98	High risk
Schroder US Mid Cap	North America	GB00B7LDLV43	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:

Name	Sector	ISIN Code	Risk
Allianz Total Return Asian Equity	Asia Pacific Excluding Japan	GB00B1FRQV53	Medium risk
ASI Strategic Bond	Sterling Strategic Bond	GB00BWK27X12	Low risk
Baillie Gifford Pacific	Asia Pacific Excluding Japan	GB0006063233	High risk
Baillie Gifford Positive Change	Global	GB00BYVGKV59	High risk
Barclays Multi-Asset Cautious	Mixed Investment 0-35% Shares	GB00BD93Z723	Low risk
Close Select Fixed Income	Sterling Strategic Bond	GB00BD6R7Y87	Low risk
Fidelity Global High Yield	Sterling High Yield	GB00B7K7SQ18	Low risk
Fidelity Japan	Japan	GB00B882N041	Medium risk
FSSA Greater China Growth	China/Greater China	GB0033874321	Medium risk
Invesco Asian Equity Income (UK)	Asia Pacific Excluding Japan	GB00B4JR4R48	Medium risk
JPM Natural Resources	Specialist	GB0031835118	High risk
Liontrust Global Dividend	Global Equity Income	GB00B9225P64	Medium risk
Liontrust Global Smaller Companies	Global	GB00B29MXF68	High risk
Liontrust India	Specialist	GB00B1L6DV51	High risk
Merian Monthly Income Bond	Sterling Strategic Bond	GB00B1XG8187	Low risk
MI Chelverton UK Equity Growth	UK All Companies	GB00BP855B75	Medium risk
Premier Miton Defensive Growth	Targeted Absolute Return	GB00B832BD89	Low risk
Premier Miton Diversified Growth	Mixed Investment 40-85% Shares	GB00B8BJV423	Medium risk
Premier Miton UK Smaller Companies	UK Smaller Companies	GB00B818N094	High risk
T. Rowe Price Global Focused Growth Equity	Global	GB00BD446774	Medium risk
Threadneedle Dynamic Real Return	Targeted Absolute Return	GB00B93TQ868	Low risk
VT Tyndall North American	North America	GB00BYPZY050	Medium 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 11% (15%)
• Alternatives 17% (17%) - includes absolute return strategies & some bond exposure
• UK Corporate Fixed Interest (i.e UK bonds) 3% (2%)
• Emerging Market Fixed Income 0% (0%)
• North American Equities 12% (12%)
• European Equities 3% (0%)
• Chinese Equities 0% (4%)
• Japanese Equities 0% (4%)
• Property 0% (0%)
• UK Equities 24% (17%)
• Gilts 0% (0%)
• Cash 5% (4%)
• Asian / Emerging market equities 10% (15%)
• Other international equities 10% (3%)
• Commodities and Energy 5% (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 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 40-60% 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 outperformed the average managed fund and the market.

 

 

 

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