80-20 Investor Best of the Best Selection – December 2017 Update

Commentary

19 funds from last month's 30 Best of the Best (BOTB) Selection regained their position in this month's shortlist. Most of those that didn't regain their place in this month's BOTB list remain in their respective Best Funds by Sector (BFBS) lists.

November was an interesting month for investors as I discussed in this month's newsletter. Just days before the end of November the BOTB selection was up by an average of 1.5% before global stock markets started to slide. In the end the BOTB finished just in positive territory which was a good result if you consider that the average managed fund lost 0.2% in November and the FTSE 100 was down 1.79%. The market jitters that characterised the last few days of November threaten to set the tone for December. If you look at the list of funds that have dropped out of the BOTB (and those that also fell out of the BFBS) they included those with a high weighting to technology stocks. The rotation out of technology stocks by US traders became prominent at the end of November and it looks like we are seeing a similar pattern starting to emerge in the BOTB.

There has been continued weakness in European equities recently so it's unsurprisingly that the last remnant of exposure in the BOTB has gone. By contrast Japanese equities have been a particular bright spot as can be seen in the latest heatmap and the level of exposure in the BOTB has increased. With the pound rallying to a two month high due to receding Brexit angsts the currency hedged Japanese funds have fared well. In fact hedged equity exposure has crept in elsewhere (namely via global funds).

As we move from November into December a number of the high risk funds (investing in the Far East) have now fallen more than 5% from their high points in November. The slump in Asian equities (in particularly in China) remains an unfolding trend, although the slump has slowed, so it will be interesting to see how that plays out. These funds remain in this month's BOTB as 80-20 Investor looks at recent momentum over a period of months which places the week's equity market falls into a wider context.

While the BOTB asset mix continues to be diversified the medium risk part of the selection now has less funds with direct equity exposure and instead includes a number of managed multi-asset funds. In terms of direct equity exposure the portfolio's exposure sits around 60-65%. At the foot of this article you can see how the 80-20 Investor Selection has continued to outperform the professional fund managers as well as the market since its launch three years ago.

Below I list this month's selection in full with the 19 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
7IM US Equity Value	North America	GB00BWBSHX88	High risk
Baillie Gifford High Yield Bond	Sterling High Yield	GB0030816713	Low risk
Baillie Gifford Japanese	Japan	GB0006011133	High risk
Baring Eastern Trust	Asia Pacific Excluding Japan	GB0000799923	High risk
BlackRock US Dynamic	North America	GB00B87XJQ69	Medium risk
CF Livingbridge UK Micro Cap	UK Smaller Companies	GB00BV9FYS80	Medium risk
CF Miton Cautious Multi Asset	Mixed Investment 20-60% Shares	GB00B0W1V856	Low risk
CFP SDL UK Buffettology	UK All Companies	GB00B3QQFJ66	Medium risk
FP Apollo Multi Asset Balanced	Mixed Investment 20-60% Shares	GB00B3FPF276	Low risk
FP Apollo Multi Asset Cautious	Mixed Investment 20-60% Shares	GB00B3FPDY55	Low risk
Henderson China Opportunities	China/Greater China	GB0031860934	High risk
JPM Asia Growth	Asia Pacific Excluding Japan	GB0030879695	High risk
JPM Global Macro Balanced	Mixed Investment 0-35% Shares	GB00B09RGK38	Low risk
Jupiter UK Smaller Companies	UK Smaller Companies	GB0004911870	Medium risk
L&G High Income Trust	Sterling High Yield	GB00B0CNHJ41	Low risk
Legg Mason IF Martin Currie Japan Alpha	Japan	GB00BVZ6V950	High risk
Man GLG Strategic Bond	Sterling Strategic Bond	GB00B731HR48	Low risk
Neptune Global Equity	Global	GB00B8DLY478	Medium risk
Neptune Japan Opportunities	Japan	GB00B3Z0Y815	Medium risk
Old Mutual Asia Pacific	Asia Pacific Excluding Japan	GB00B1XG8C90	High risk
Premier Diversified	Mixed Investment 40-85% Shares	GB00B8BJV423	Low risk
Sarasin Global Dividend (Sterling Hedged)	Global Equity Income	GB00BGDF8439	Medium risk
Schroder High Yield Opportunities	Sterling High Yield	GB00B83RDY83	Low risk
Slater Recovery	UK All Companies	GB0031554248	Medium risk
Standard Life Investments Global Emerging Markets Equity Income	Global Emerging Markets	GB00B8B02G41	High risk
Standard Life Investments Global Smaller Companies	Global	GB00B7KVX245	Medium risk
T. Bailey Dynamic	Mixed Investment 20-60% Shares	GB00B1385S07	Low risk
Threadneedle China Opportunities	China/Greater China	GB00B1PRW734	High risk
TM Cavendish AIM	UK Smaller Companies	GB00B0JX3Z52	High risk
Wise Funds Limited TB Wise Multi-Asset Growth	Flexible Investment	GB0034272533	Medium 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
JPM Global Macro Balanced	Mixed Investment 0-35% Shares	GB00B09RGK38	Low risk
Premier Diversified	Mixed Investment 40-85% Shares	GB00B8BJV423	Low risk
Baillie Gifford High Yield Bond	Sterling High Yield	GB0030816713	Low risk
FP Apollo Multi Asset Balanced	Mixed Investment 20-60% Shares	GB00B3FPF276	Low risk
FP Apollo Multi Asset Cautious	Mixed Investment 20-60% Shares	GB00B3FPDY55	Low risk
T. Bailey Dynamic	Mixed Investment 20-60% Shares	GB00B1385S07	Low risk
CF Miton Cautious Multi Asset	Mixed Investment 20-60% Shares	GB00B0W1V856	Low risk
L&G High Income Trust	Sterling High Yield	GB00B0CNHJ41	Low risk
Schroder High Yield Opportunities	Sterling High Yield	GB00B83RDY83	Low risk
Man GLG Strategic Bond	Sterling Strategic Bond	GB00B731HR48	Low risk
Neptune Japan Opportunities	Japan	GB00B3Z0Y815	Medium risk
Jupiter UK Smaller Companies	UK Smaller Companies	GB0004911870	Medium risk
Neptune Global Equity	Global	GB00B8DLY478	Medium risk
Standard Life Investments Global Smaller Companies	Global	GB00B7KVX245	Medium risk
CFP SDL UK Buffettology	UK All Companies	GB00B3QQFJ66	Medium risk
Slater Recovery	UK All Companies	GB0031554248	Medium risk
CF Livingbridge UK Micro Cap	UK Smaller Companies	GB00BV9FYS80	Medium risk
Sarasin Global Dividend (Sterling Hedged)	Global Equity Income	GB00BGDF8439	Medium risk
BlackRock US Dynamic	North America	GB00B87XJQ69	Medium risk
Wise Funds Limited TB Wise Multi-Asset Growth	Flexible Investment	GB0034272533	Medium risk
Baring Eastern Trust	Asia Pacific Excluding Japan	GB0000799923	High risk
Henderson China Opportunities	China/Greater China	GB0031860934	High risk
Threadneedle China Opportunities	China/Greater China	GB00B1PRW734	High risk
Old Mutual Asia Pacific	Asia Pacific Excluding Japan	GB00B1XG8C90	High risk
Baillie Gifford Japanese	Japan	GB0006011133	High risk
JPM Asia Growth	Asia Pacific Excluding Japan	GB0030879695	High risk
Legg Mason IF Martin Currie Japan Alpha	Japan	GB00BVZ6V950	High risk
Standard Life Investments Global Emerging Markets Equity Income	Global Emerging Markets	GB00B8B02G41	High risk
7IM US Equity Value	North America	GB00BWBSHX88	High risk
TM Cavendish AIM	UK Smaller Companies	GB00B0JX3Z52	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 High Income	Sterling Strategic Bond	GB00B2PLJN71	Low risk
Artemis US Select	North America	GB00BMMV5105	Medium risk
Baillie Gifford American	North America	GB0006061963	Medium risk
Baillie Gifford Emerging Markets Growth	Global Emerging Markets	GB0006020647	High risk
Baillie Gifford Global Discovery	Global	GB0006059330	Medium risk
F&C Property Growth and Income	Property	GB00BQWJ8687	Low risk
Fidelity China Consumer	China/Greater China	GB00B82ZSC67	High risk
Henderson Global Technology	Technology & Telecommunication	GB0007698847	High risk
Liontrust Sustainable Future Absolute Growth	Flexible Investment	GB0030029622	Medium risk
Man GLG UK Income	UK Equity Income	GB00B0117B11	Medium risk
Standard Life Investments UK Equity Unconstrained	UK All Companies	GB00B7LK2232	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 13% (14%)
• Alternatives 20% (13%) - includes absolute return strategies & property
• UK Corporate Fixed Interest (i.e UK bonds) 0% (4%)
• Emerging Market Fixed Interest 0% (0%)
• North American Equities 10% (17%)
• European Equities 0% (3%)
• Japanese Equities 11% (8%)
• Property 0% (0%)
• UK Equities 17% (17%)
• Cash 5% (4%)
• Asian equities 9% (6%)
• Asia Pacific Emerging equities 10% (11%)
• Other international equities 5% (3%)

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.