80-20 Investor Best of the Best Selection – December 2019 Update

Commentary

November turned out to be a strong month for equity markets as discussed in this month's newsletter. November's BOTB had some stand out performances as shown in the table below.

Fund	% return in November
L&G Global Health & Pharmaceuticals Index Trust	4.53
Slater Growth	3.55
AXA Framlington UK Growth	3.47
Marlborough US Multi-Cap Income	3.06
Royal London Sustainable Leaders Trust	2.82
VT Gravis Clean Energy Income	2.62

In a month where risk was rewarded, only 5 funds didn't make a profit and these were understandably bond/gilt funds, yet the losses were under 0.5%. December's BOTB continues the recent trend of steadily reducing the selections unhedged US equity exposure despite US equities hitting new all-time highs in dollar terms. Again, this is reflective of a wider trend of reducing the BOTB's currency exposure across its overseas holdings more widely, while at the same time increasing the BOTB's domestic equity exposure. Other than that the asset mix of the BOTB has remained fairly consistent.

Interestingly only 9 funds retain their place in December's BOTB which is the lowest retention rate for some time. This is reflective of the recent market rotations we've seen from defensive sectors to cyclical sectors as well as from growth plays into value stocks. The equity content of the BOTB has marginally increased from last month (up from 60% to now sit at 62%).

At the foot of this article you can see how the 80-20 Investor selection has outperformed the professional fund managers as well as the market since its launch over five years ago.

Below I list this month's selection in full with the 9 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
ASI Corporate Bond	Sterling Corporate Bond	GB00BWK26G71	Low risk
ASI Japanese Equity	Japan	GB0004521737	Medium risk
ASI UK Real Estate Share	Property Other	GB00B0XWNN66	High risk
Baillie Gifford Positive Change	Global	GB00BYVGKV59	High risk
Barclays Europe (ex-UK) Alpha	Europe Excluding UK	GB00B72WQ825	High risk
BlackRock Continental European	Europe Excluding UK	GB00B4VY9893	High risk
BNY Mellon Global Absolute Return	Targeted Absolute Return	GB00B86R4N19	Low risk
Close FTSE techMARK	Technology & Telecommunications	GB00B87JKQ15	High risk
Fidelity Enhanced Income	UK Equity Income	GB00B87HPZ94	Medium risk
Fidelity UK Smaller Companies	UK Smaller Companies	GB00B7VNMB18	High risk
First State Diversified Growth	Flexible Investment	GB00BVXC2S15	Medium risk
First State Japan Focus	Japan	GB00BWNGX432	High risk
Invesco High Yield (UK)	Sterling High Yield	GB00B3RW7649	Low risk
Jupiter Japan Income	Japan	GB00B0HZTZ55	High risk
Liontrust Sustainable Future Corporate Bond	Sterling Corporate Bond	GB0030029069	Low risk
Marlborough US Multi-Cap Income	North America	GB0001722882	High risk
Merian Corporate Bond	Sterling Corporate Bond	GB00B1XG7X39	Low risk
Merian Monthly Income Bond	Sterling Strategic Bond	GB00B1XG8187	Low risk
Premier Diversified Income	Mixed Investment 20-60% Shares	GB00BYPDV863	Low risk
Royal London Sustainable Diversified Trust	Mixed Investment 20-60% Shares	GB00B844WJ68	Low risk
Royal London Sustainable Leaders Trust	UK All Companies	GB00B7V23Z99	Medium risk
Royal London Sustainable Managed Growth Trust	Mixed Investment 0-35% Shares	GB00B8H7XS88	Low risk
Royal London Sustainable World Trust	Mixed Investment 40-85% Shares	GB00B882H241	Medium risk
Sarasin Global Dividend (Sterling Hedged)	Global Equity Income	GB00BGDF8439	Medium risk
Sarasin Global Equity Real Return	Flexible Investment	GB00B7W4B053	Medium risk
Sarasin Responsible Global Equity (Sterling Hedged)	Global	GB00B816B655	Medium risk
Sarasin Thematic Global Equity (Sterling Hedged)	Global	GB00B83F3755	High risk
Schroder Sterling Corporate Bond	Sterling Corporate Bond	GB0009379370	Low risk
Thesis Climate Assets	Mixed Investment 40-85% Shares	GB00B3K3HX15	Medium risk
VT Gravis Clean Energy Income	Global	GB00BFN4H792	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
ASI Corporate Bond	Sterling Corporate Bond	GB00BWK26G71	Low risk
BNY Mellon Global Absolute Return	Targeted Absolute Return	GB00B86R4N19	Low risk
Invesco High Yield (UK)	Sterling High Yield	GB00B3RW7649	Low risk
Liontrust Sustainable Future Corporate Bond	Sterling Corporate Bond	GB0030029069	Low risk
Merian Corporate Bond	Sterling Corporate Bond	GB00B1XG7X39	Low risk
Merian Monthly Income Bond	Sterling Strategic Bond	GB00B1XG8187	Low risk
Premier Diversified Income	Mixed Investment 20-60% Shares	GB00BYPDV863	Low risk
Royal London Sustainable Diversified Trust	Mixed Investment 20-60% Shares	GB00B844WJ68	Low risk
Royal London Sustainable Managed Growth Trust	Mixed Investment 0-35% Shares	GB00B8H7XS88	Low risk
Schroder Sterling Corporate Bond	Sterling Corporate Bond	GB0009379370	Low risk
ASI Japanese Equity	Japan	GB0004521737	Medium risk
Fidelity Enhanced Income	UK Equity Income	GB00B87HPZ94	Medium risk
First State Diversified Growth	Flexible Investment	GB00BVXC2S15	Medium risk
Royal London Sustainable Leaders Trust	UK All Companies	GB00B7V23Z99	Medium risk
Royal London Sustainable World Trust	Mixed Investment 40-85% Shares	GB00B882H241	Medium risk
Sarasin Global Dividend (Sterling Hedged)	Global Equity Income	GB00BGDF8439	Medium risk
Sarasin Global Equity Real Return	Flexible Investment	GB00B7W4B053	Medium risk
Sarasin Responsible Global Equity (Sterling Hedged)	Global	GB00B816B655	Medium risk
Thesis Climate Assets	Mixed Investment 40-85% Shares	GB00B3K3HX15	Medium risk
VT Gravis Clean Energy Income	Global	GB00BFN4H792	Medium risk
ASI UK Real Estate Share	Property Other	GB00B0XWNN66	High risk
Baillie Gifford Positive Change	Global	GB00BYVGKV59	High risk
Barclays Europe (ex-UK) Alpha	Europe Excluding UK	GB00B72WQ825	High risk
BlackRock Continental European	Europe Excluding UK	GB00B4VY9893	High risk
Close FTSE techMARK	Technology & Telecommunications	GB00B87JKQ15	High risk
Fidelity UK Smaller Companies	UK Smaller Companies	GB00B7VNMB18	High risk
First State Japan Focus	Japan	GB00BWNGX432	High risk
Jupiter Japan Income	Japan	GB00B0HZTZ55	High risk
Marlborough US Multi-Cap Income	North America	GB0001722882	High risk
Sarasin Thematic Global Equity (Sterling Hedged)	Global	GB00B83F3755	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
ASI Ethical Corporate Bond	Sterling Corporate Bond	GB00B708KW45	Low risk
ASI Global Real Estate Share	Property Other	GB00B7MR5W47	High risk
ASI Sterling Bond	Global Bonds	GB00BWK27087	Low risk
AXA Framlington UK Growth	UK All Companies	GB0003509873	Medium risk
Baillie Gifford Multi Asset Income	Flexible Investment	GB00BFXY2964	Low risk
Close Growth Portfolio	Flexible Investment	GB00B7F1W221	Medium risk
Fidelity European	Europe Excluding UK	GB00BFRT3504	Medium risk
Fidelity Global Dividend	Global Equity Income	GB00B7778087	Medium risk
Fidelity Global Focus	Global	GB00B3RDH349	High risk
Fidelity Multi Asset Allocator Defensive	Mixed Investment 0-35% Shares	GB00B8YQD220	Low risk
First State Global Property Securities	Property Other	GB00B1F76N79	High risk
Franklin Sterling Corporate Bond	Sterling Corporate Bond	GB00BYZCTS97	Low risk
Franklin UK Gilt	UK Gilts	GB00BYZCTV27	Low risk
L&G Global Health & Pharmaceuticals Index Trust	Global	GB00B0CNH387	High risk
LF Miton Global Infrastructure Income	Global Equity Income	GB00BD3H9L21	Medium risk
Liontrust Japan Equity	Japan	GB00BXDZFF23	High risk
M&G Global Listed Infrastructure	Global	GB00BF00R928	Medium risk
Merian Global Strategic Bond	Sterling Strategic Bond	GB00B1XG8G39	Low risk
Sarasin Responsible Global Equity	Global	GB00B8369M57	High risk
Schroder Global Cities Real Estate	Property Other	GB00B1VPTY75	High risk
Slater Growth	UK All Companies	GB00B0706C66	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 17% (17%)
• Alternatives 10% (12%) - includes absolute return strategies & some bond exposure
• UK Corporate Fixed Interest (i.e UK bonds) 7% (6%)
• Emerging Market Fixed Income 0% (0%)
• North American Equities 7% (12%)
• European Equities 11% (9%)
• Japanese Equities 11% (11%)
• Property 4% (10%)
• UK Equities 19% (13%)
• Gilts 0% (5%)
• Cash 4% (0%)
• Emerging market equities % (0%)
• Other international equities 6% (3%)
• Asian Equities 0% (0%)
• Commodities and Energy 4% (2%)

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 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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