Commentary
11 funds from last month's 29 Best of the Best Selection regained their position in December's shortlist. November was a tough month for investors with the average multi-asset fund down 2% and it was a rare occasion as the 80-20 Investor Best of the Best Selection (BOTB) underperformed falling 4%. But to put that into some form of context, the BOTB is still up 13.32% in 2016 alone, comfortably outperforming the average multi-asset fund by between 3.75% - 6.14%. 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. Most of November's pain for the BOTB was felt in a single day via its bond global and Asian equity holding. These things happen and the catalyst was Donald Trump's election victory. Ultimately unless you had been 100% invested in US equities (or stayed in cash) you would have lost money as an investor during November. As such there is little to dwell on. We are more interested in trends over longer timeframes than a month and if history serves as a guide then we are likely to see some form of moderation in the extreme moves we've seen.
When looking at the new BOTB list it is interesting to see that the bond holdings are almost exclusively UK high yield and strategic bond funds, nearly all of which I previously identified (in my Bond funds for a bond bear market) as having a lower more favourable duration. Overall the global bond exposure of the BOTB has dropped to its lowest level for some time with exposure to UK fixed interest increasing slightly which also should reduce the currency exposure of the portfolio slightly.
The number of managed funds from the Mixed sectors has also fallen, which reflects the impact of the global bond sell-off as most managed funds maintain a core exposure to global bonds. Once again we see Targeted Absolute Return funds providing stability and indeed two of the funds that retained their position in the portfolio are from this sector. Perhaps unsurprisingly the exposure to US equities has crept up a touch, a reflection of their resilience after Trump's victory.
The portfolio's direct equity exposure remains around 50% while the 'alternatives' listed will likely 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.
Below I list this month's selection in full with the 11 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.
December'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 Level |
| 7IM - Unconstrained | Targeted Absolute Return | GB00B75MS619 | Medium risk |
| Artemis - Global Emerging Markets | Global Emerging Markets | GB00BW9HL132 | High risk |
| Artemis - Global Income | Global Equity Income | GB00B5N99561 | Medium risk |
| Artemis - High Income | Sterling Strategic Bond | GB00B2PLJN71 | Low risk |
| Artemis - Monthly Distribution | Mixed Investment 20%-60% Shares | GB00B6TK3R06 | Medium risk |
| AXA - Framlington Managed Income | Sterling Strategic Bond | GB00B6RPX228 | Low risk |
| Baillie Gifford - Corporate Bond | Sterling Strategic Bond | GB0005947741 | Low risk |
| Baillie Gifford - Japanese | Japan | GB0006011133 | High risk |
| BlackRock - US Dynamic | North America | GB00B87XJQ69 | High risk |
| Fidelity - China Consumer | China/Greater China | GB00B82ZSC67 | High risk |
| Fidelity - Global High Yield | Sterling High Yield | GB00B7K7SQ18 | Low risk |
| GAM - North American Growth | North America | GB0002423852 | High risk |
| Henderson - China Opportunities | China/Greater China | GB0031860934 | High risk |
| IFSL - Brooks Macdonald Defensive Capital | Targeted Absolute Return | GB00B61MR835 | Low risk |
| Invesco Perpetual - Asian | Asia Pacific Excluding Japan | GB00B8N44Q86 | High risk |
| Jupiter - Income Trust | UK Equity Income | GB0004791389 | Medium risk |
| Jupiter - UK Special Situations | UK All Companies | GB0004777347 | Medium risk |
| Majedie - UK Equity | UK All Companies | GB0033283895 | Medium risk |
| Man GLG - Corporate Bond | Global Bonds | GB00B0118B85 | Medium risk |
| Man GLG - Japan Core Alpha | Japan | GB00B3F46Y30 | High risk |
| Marlborough - European Multi-Cap | Europe Excluding UK | GB0001719730 | Medium risk |
| Marlborough - Far East Growth | Asia Pacific Excluding Japan | GB00B0NVCN62 | High risk |
| Old Mutual - Cirilium Conservative | Mixed Investment 0%-35% Shares | GB00B4LTHW43 | Low risk |
| Rathbone - Strategic Bond | Sterling Strategic Bond | GB00B6ZS1L87 | Low risk |
| Schroder - Global Equity Income | Global | GB00B76V7M69 | High risk |
| Schroder - Monthly High Income | Sterling High Yield | GB00B83RDY83 | Low risk |
| TB Saracen - Global Income & Growth | Global Equity Income | GB00B8MG4091 | Medium risk |
| Threadneedle - Dollar Bond | Global Bonds | GB00B9BRCL73 | Medium risk |
| Threadneedle - Dynamic Real Return | Targeted Absolute Return | GB00BWWC6P48 | Low risk |
December's Best of the Best Selection - (grouped by risk)
Here is December'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 Level |
| Artemis - High Income | Sterling Strategic Bond | GB00B2PLJN71 | Low risk |
| AXA - Framlington Managed Income | Sterling Strategic Bond | GB00B6RPX228 | Low risk |
| Baillie Gifford - Corporate Bond | Sterling Strategic Bond | GB0005947741 | Low risk |
| Fidelity - Global High Yield | Sterling High Yield | GB00B7K7SQ18 | Low risk |
| IFSL - Brooks Macdonald Defensive Capital | Targeted Absolute Return | GB00B61MR835 | Low risk |
| Old Mutual - Cirilium Conservative | Mixed Investment 0%-35% Shares | GB00B4LTHW43 | Low risk |
| Rathbone - Strategic Bond | Sterling Strategic Bond | GB00B6ZS1L87 | Low risk |
| Schroder - Monthly High Income | Sterling High Yield | GB00B83RDY83 | Low risk |
| Threadneedle - Dynamic Real Return | Targeted Absolute Return | GB00BWWC6P48 | Low risk |
| 7IM - Unconstrained | Targeted Absolute Return | GB00B75MS619 | Medium risk |
| Artemis - Global Income | Global Equity Income | GB00B5N99561 | Medium risk |
| Artemis - Monthly Distribution | Mixed Investment 20%-60% Shares | GB00B6TK3R06 | Medium risk |
| Jupiter - Income Trust | UK Equity Income | GB0004791389 | Medium risk |
| Jupiter - UK Special Situations | UK All Companies | GB0004777347 | Medium risk |
| Majedie - UK Equity | UK All Companies | GB0033283895 | Medium risk |
| Man GLG - Corporate Bond | Global Bonds | GB00B0118B85 | Medium risk |
| Marlborough - European Multi-Cap | Europe Excluding UK | GB0001719730 | Medium risk |
| TB Saracen - Global Income & Growth | Global Equity Income | GB00B8MG4091 | Medium risk |
| Threadneedle - Dollar Bond | Global Bonds | GB00B9BRCL73 | Medium risk |
| Artemis - Global Emerging Markets | Global Emerging Markets | GB00BW9HL132 | High risk |
| Baillie Gifford - Japanese | Japan | GB0006011133 | High risk |
| BlackRock - US Dynamic | North America | GB00B87XJQ69 | High risk |
| Fidelity - China Consumer | China/Greater China | GB00B82ZSC67 | High risk |
| GAM - North American Growth | North America | GB0002423852 | High risk |
| Henderson - China Opportunities | China/Greater China | GB0031860934 | High risk |
| Invesco Perpetual - Asian | Asia Pacific Excluding Japan | GB00B8N44Q86 | High risk |
| Man GLG - Japan Core Alpha | Japan | GB00B3F46Y30 | High risk |
| Marlborough - Far East Growth | Asia Pacific Excluding Japan | GB00B0NVCN62 | High risk |
| Schroder - Global Equity Income | Global | GB00B76V7M69 | 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 Level |
| Artemis - US Extended Alpha | North America | GB00BMMV5G59 | Medium risk |
| Baillie Gifford - Emerging Markets Leading Companies | Global Emerging Markets | GB00B06HZN29 | High risk |
| BlackRock - NURS II Consensus 60 | Mixed Investment 20%-60% Shares | GB00B86VJL67 | Low risk |
| BlackRock - Overseas Corporate Bond Tracker | Global Bonds | GB00B58YKH53 | Medium risk |
| Insight - Inflation Linked Corporate Bond | Sterling Strategic Bond | GB00B8CJGZ73 | Low risk |
| JPM - Europe Dynamic Ex UK | Europe Excluding UK | GB00B02L5M76 | Medium risk |
| Jupiter - Global Emerging Markets | Global Emerging Markets | GB00B4JVHP59 | High risk |
| L&G - Global 100 Index Trust | Global | GB00B0CNH056 | Medium risk |
| L&G - Global Technology Index Trust | Technology & Telecom | GB00B0CNH163 | High risk |
| S&W - Saltus Multi Asset Class | Targeted Absolute Return | GB00B43T2834 | Low risk |
| Schroder - European Alpha Plus | Europe Excluding UK | GB00B7LDKR32 | Medium risk |
| Schroder - Tokyo | Japan | GB00B4SZR818 | High risk |
| Threadneedle - Defensive | Mixed Investment 0%-35% Shares | GB0032010042 | Low risk |
| Threadneedle - Defensive Equity & Bond | Mixed Investment 0%-35% Shares | GB0032009937 | Low risk |
| Threadneedle - European High Yield Bond | Global Bonds | GB00B6RRFW23 | Medium risk |
| Threadneedle - Japan | Japan | GB00B7TRT705 | High risk |
| UBS - Global Emerging Markets Equity | Global Emerging Markets | GB0033696013 | High risk |
| Vanguard - LifeStrategy 80% Equity | Mixed Investment 40%-85% Shares | GB00B4PQW151 | 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 15% (21%)
- Alternatives/Other 18% (19%) - mostly absolute return strategies
- UK Corporate Fixed Interest (i.e UK bonds) 10% (6%)
- North American Equities 12% (9%)
- European Equities 7% (12%)
- Japanese Equities 8% (11%)
- Property 0% (0%)
- UK Equities 12% (8%)
- Cash 5% (0%)
- Asian equities 4% (5%)
- Asia Pacific Emerging equities 9% (9%)
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.
All performance figures are net of fund charges. The material in any email, the MoneytotheMasses.com website, associated pages / channels / accounts and any other correspondence are for general information only and do not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation. See full Terms & Conditions, Privacy Policy and Disclaimer.
Neither MoneytotheMasses.com or 80-20 Investor nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.
Funds invest in shares, bonds, and other financial instruments and are by their nature speculative and can be volatile. You should never invest more than you can safely afford to lose. The value of your investment can go down as well as up so you may get back less than you originally invested. Tax rules can change and benefits depend on individual circumstances.
Information provided by MoneytotheMasses.com or 80-20 Investor is for general information only and not intended to be relied upon by readers in making (or not making) specific investment decisions.
Appropriate independent advice should be obtained before making any such decisions. Leadenhall Learning (owner of MoneytotheMasses.com or 80-20 Investor) and its staff do not accept liability for any loss suffered by readers as a result of any such decisions.
The tables and graphs are derived from data supplied by Trustnet. All rights Reserved.
