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

Commentary

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.

The BOTB continues to be devoid of Japanese stocks but a small exposure to Asian stocks has crept it. There continues to be a nod to dollar strength (Newton International Bond is something of a dollar/GBP proxy albeit also influenced by bond movements) which is a trade that has performed well during the autumn unease.

The exposure to property funds that invest in actual buildings (rather than equities) has risen again and my continued concern regarding the liquidity of property funds (and why I don’t personally hold them in my £50k portfolio), if a Brexit deal is eventually forged, may prove overly cautious. Finally, the BOTB's cash position has increased to 5%.

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 four 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
Aberdeen UK Property	UK Direct Property	GB00BTLX1F24	Low risk
BlackRock European Absolute Alpha	Targeted Absolute Return	GB00B4Y62W78	Low risk
Carvetian Electric & General Investment	Global	GB00B52CBS38	High risk
Close Diversified Income Portfolio	Mixed Investment 20-60% Shares	GB00B708TJ43	Low risk
Fidelity American	North America	GB00B8GPC429	High risk
Fidelity American Special Situations	North America	GB00B89ST706	High risk
Fidelity Global Dividend	Global Equity Income	GB00B7GJPN73	Medium risk
Fidelity Multi Asset Allocator Growth	Mixed Investment 40-85% Shares	GB00B9C3GS90	Medium risk
Fidelity Multi Asset Income & Growth	Mixed Investment 40-85% Shares	GB00BGFBN227	Low risk
JPM US Equity Income	North America	GB00B3FJQ045	High risk
L&G Global Health & Pharmaceuticals Index Trust	Global	GB00B0CNH387	High risk
LF Canlife North American	North America	GB00B73N3278	High risk
Man GLG Corporate Bond	Global Bonds	GB00B0118B85	Low risk
Morgan Stanley Global Brands	Global	GB0032482498	High risk
Newton Asian Income	Asia Pacific Excluding Japan	GB00B0MY6Z69	Medium risk
Newton Global Income	Global Equity Income	GB00B0MY6T00	Medium risk
Newton International Bond	Global Bonds	GB0006779655	Low risk
Sarasin Global Higher Dividend	Global Equity Income	GB00B84ZSV39	Medium risk
Schroder Global Healthcare	Global	GB00B76V7Q08	High risk
Standard Life Investments Emerging Market Debt	Global Emerging Markets Bond	GB00B8K56P77	Medium risk
Standard Life Investments Global Real Estate	Property Other	GB00B774LD38	Low risk
Standard Life Investments UK Real Estate	UK Direct Property	GB00BYPHP536	Low risk
TB Evenlode Global Income	Global Equity Income	GB00BF1QMV61	Medium risk
Thesis TM Sanditon European	Europe Excluding UK	GB00BNY7YH21	Medium risk
Thesis TM Sanditon European Select	Targeted Absolute Return	GB00BNY7Y722	High risk
Thesis TM Sanditon UK Select	Targeted Absolute Return	GB00BNY7YM73	Medium risk
TIME Investments Commercial Freehold	UK Direct Property	GB00BLRZPX27	Low risk
Troy Asset Management Ltd Trojan	Flexible Investment	GB0034243732	Low risk
Troy Asset Management Ltd Trojan Global Equity	Global	GB00B0ZJ5S47	High risk
Troy Asset Management Ltd Trojan Global Income	Global Equity Income	GB00BD82KP33	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
Aberdeen UK Property	UK Direct Property	GB00BTLX1F24	Low risk
BlackRock European Absolute Alpha	Targeted Absolute Return	GB00B4Y62W78	Low risk
Close Diversified Income Portfolio	Mixed Investment 20-60% Shares	GB00B708TJ43	Low risk
Fidelity Multi Asset Income & Growth	Mixed Investment 40-85% Shares	GB00BGFBN227	Low risk
Man GLG Corporate Bond	Global Bonds	GB00B0118B85	Low risk
Newton International Bond	Global Bonds	GB0006779655	Low risk
Standard Life Investments Global Real Estate	Property Other	GB00B774LD38	Low risk
Standard Life Investments UK Real Estate	UK Direct Property	GB00BYPHP536	Low risk
TIME Investments Commercial Freehold	UK Direct Property	GB00BLRZPX27	Low risk
Troy Asset Management Ltd Trojan	Flexible Investment	GB0034243732	Low risk
Fidelity Global Dividend	Global Equity Income	GB00B7GJPN73	Medium risk
Fidelity Multi Asset Allocator Growth	Mixed Investment 40-85% Shares	GB00B9C3GS90	Medium risk
Newton Asian Income	Asia Pacific Excluding Japan	GB00B0MY6Z69	Medium risk
Newton Global Income	Global Equity Income	GB00B0MY6T00	Medium risk
Sarasin Global Higher Dividend	Global Equity Income	GB00B84ZSV39	Medium risk
Standard Life Investments Emerging Market Debt	Global Emerging Markets Bond	GB00B8K56P77	Medium risk
TB Evenlode Global Income	Global Equity Income	GB00BF1QMV61	Medium risk
Thesis TM Sanditon European	Europe Excluding UK	GB00BNY7YH21	Medium risk
Thesis TM Sanditon UK Select	Targeted Absolute Return	GB00BNY7YM73	Medium risk
Troy Asset Management Ltd Trojan Global Income	Global Equity Income	GB00BD82KP33	Medium risk
Carvetian Electric & General Investment	Global	GB00B52CBS38	High risk
Fidelity American	North America	GB00B8GPC429	High risk
Fidelity American Special Situations	North America	GB00B89ST706	High risk
JPM US Equity Income	North America	GB00B3FJQ045	High risk
L&G Global Health & Pharmaceuticals Index Trust	Global	GB00B0CNH387	High risk
LF Canlife North American	North America	GB00B73N3278	High risk
Morgan Stanley Global Brands	Global	GB0032482498	High risk
Schroder Global Healthcare	Global	GB00B76V7Q08	High risk
Thesis TM Sanditon European Select	Targeted Absolute Return	GB00BNY7Y722	High risk
Troy Asset Management Ltd Trojan Global Equity	Global	GB00B0ZJ5S47	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
AXA Sterling Index Linked Bond	UK Index Linked Gilts	GB00B02Y6B22	Medium risk
BlackRock US Dynamic	North America	GB00B87XJQ69	High risk
L&G Global Technology Index Trust	Technology & Telecommunications	GB00B0CNH163	High risk
M&G Index-Linked Bond	UK Index Linked Gilts	GB0031111478	Medium risk
Neptune US Income	North America	GB00B909H978	High risk
Royal London Index Linked	UK Index Linked Gilts	GB00B8DDWW71	Medium risk
Standard Life Investments AAA Income	Sterling Corporate Bond	GB00B3W48X95	Low risk
TB Evenlode Income	UK All Companies	GB00BD0B7D55	Medium risk
Threadneedle Global Bond	Global Bonds	GB0001533685	Low risk
UBS S&P 500 Index	North America	GB00BMN91T34	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 10% (18%)
• Alternatives 20% (19%) - includes absolute return strategies & property
• UK Corporate Fixed Interest (i.e UK bonds) 0% (7%)
• Emerging Market Fixed Interest 0% (0%)
• North American Equities 26% (28%)
• European Equities 8% (5%)
• Japanese Equities 0% (0%)
• Property 10% (12%)
• UK Equities 8% (7%)
• Cash 5% (0%)
• Asian equities 2% (0%)
• Asia Pacific Emerging equities 0% (0%)
• Other international equities 11% (4%)

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.

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