80-20 Investor Best of the Best Selection – December 2018 Update

In contrast to last time, the changes to the BOTB were much less marked. In fact, 19 funds from November's BOTB made it into December's. While the overall equity exposure has increased slightly from 44% to around 55% it is still cautious by historical standards. The cautious stance is also reflected in the fund choices themselves. Defensive equity income funds dominate the medium risk portion of the BOTB exposure. As well as being globally diversified these funds tend to also be less exposed to economically sensitive sectors. Instead, favouring pharmaceuticals and consumer staples (things that people buy even in a recession). This has helped them outperform their peers and avoid the worst (but obviously not all) of the equity sell-off since October as concerns over slowing global economic growth increase.

As you can see from this month's heatmap during November risk assets fared better than they did in October and emerging markets received a boost from more dovish soundbites emanating from the US Federal Reserve.