80-20 Investor Best of the Best Selection - December 2020 Update

Commentary

15 funds from November's BOTB retain their place in December's shortlist. The chart below shows what an extraordinary month November turned out to be. As I've explained in my recent newsletters the market underwent a seismic rotation on 9th November when Pfizer announced its vaccine. You can see it clearly on the chart below which shows the BOTB versus the average sector performance of professionally managed mixed-asset funds with varying equity exposures.

The announcement saw the BOTB fall almost 4% in a single day before regaining most of that in the weeks that followed. If you removed that one day then the BOTB would have outperformed the benchmarks shown. It is interesting that the BOTB portfolio outperformed them after the vaccine 'reset'. Perhaps a sign that the vaccine rotation has slowed and partially unwound? It's no surprise that 15 funds remain in the portfolio while there are 15 new ones, a sign of not throwing the baby out with the bathwater but also an acknowledgement that the investing backdrop has changed.

Despite the one day setback, it was a strong month for the BOTB with some incredible performances (from familiar names) as shown below:

Fund	Nov % return
Baillie Gifford Positive Change	12.66
T. Rowe Price Global Focused Growth Equity	9.9
Barclays Europe (ex-UK) Alpha	9.85
JPM Japan	9.51
Baillie Gifford European	8.89
Baillie Gifford Pacific	8.36
Baillie Gifford Managed	7.86
Premier Miton UK Smaller Companies	7.63
AXA Framlington Global Technology	6.85
Threadneedle Global Emerging Market Equity	6.64
Baillie Gifford Long Term Global Growth Investment	6.54

Equities still dominate the new BOTB at around 60% of assets. Overall the asset mix of the BOTB remains broadly the same but this time the exposure to UK equities has increased at the expense of US equities (see the bottom of this article for the full asset mix). This is a reflection of the vaccine trade as well as the strong pound. In addition, the significant emerging market exposure is a result of the falling dollar. The portfolio still has sizeable exposure to Chinese equities and to Asian equities. Gilts remain an absentee within the low-risk portion of the BOTB which remains a mix of strategic bond funds, UK corporate bonds and absolute return funds.

At the foot of this article, you can see how the 80-20 Investor selection continues to outperform the professional fund managers as well as the market since its launch six years ago.

Below I list this month's selection in full with the 15 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 Moderately Cautious	Mixed Investment 0-35% Shares	GB0033953497	Low risk
Allianz Total Return Asian Equity	Asia Pacific Excluding Japan	GB00B1FRQV53	High risk
ASI Asian Pacific Growth Equity	Asia Pacific Excluding Japan	GB00B7MZSJ60	Medium risk
ASI Strategic Bond	Sterling Strategic Bond	GB00BWK27X12	Low risk
Baillie Gifford European	Europe Excluding UK	GB0006058258	High risk
Baillie Gifford Global Income Growth	Global Equity Income	GB0005772586	Medium risk
Baillie Gifford Global Stewardship	Global	GB00BYNK7G95	High risk
Baillie Gifford Long Term Global Growth Investment	Global	GB00BD5Z0Z54	High risk
Baillie Gifford Managed	Mixed Investment 40-85% Shares	GB0006010168	Medium risk
Baillie Gifford Pacific	Asia Pacific Excluding Japan	GB0006063233	High risk
Baillie Gifford Positive Change	Global	GB00BYVGKV59	High risk
Barings Eastern Trust	Asia Pacific Excluding Japan	GB0000799923	High risk
BNY Mellon Real Return	Targeted Absolute Return	GB0001642635	Low risk
Fidelity China Consumer	China/Greater China	GB00B82ZSC67	Medium risk
Fidelity Global High Yield	Sterling High Yield	GB00B7K7SQ18	Medium risk
Fidelity Multi Asset Open Defensive	Mixed Investment 0-35% Shares	GB00BC7GXK56	Low risk
Fidelity UK Smaller Companies	UK Smaller Companies	GB00B7VNMB18	High risk
FSSA Greater China Growth	China/Greater China	GB0033874321	Medium risk
Invesco Global Emerging Markets (UK)	Global Emerging Markets	GB00B3RW7S64	High risk
JPM Japan	Japan	GB00B1XMTP77	Medium risk
JPM Multi Asset Income	Mixed Investment 20-60% Shares	GB00B4N1ZJ15	Low risk
Jupiter Corporate Bond	Sterling Corporate Bond	GB0002691805	Low risk
Liontrust Global Alpha	Flexible Investment	GB0031190555	Medium risk
Merian Monthly Income Bond	Sterling Strategic Bond	GB00B1XG8187	Low risk
MI Chelverton UK Equity Growth	UK All Companies	GB00BP855B75	Medium risk
Morgan Stanley Sterling Corporate Bond	Sterling Corporate Bond	GB0004757497	Low risk
Rathbone Ethical Bond Fund	Sterling Corporate Bond	GB0030957137	Low risk
T. Rowe Price Global Focused Growth Equity	Global	GB00BD446774	Medium risk
Threadneedle Dynamic Real Return	Targeted Absolute Return	GB00B93TQ868	Low risk
Threadneedle Global Emerging Market Equity	Global Emerging Markets	GB00B10SJD63	High 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
7IM Moderately Cautious	Mixed Investment 0-35% Shares	GB0033953497	Low risk
ASI Strategic Bond	Sterling Strategic Bond	GB00BWK27X12	Low risk
BNY Mellon Real Return	Targeted Absolute Return	GB0001642635	Low risk
Fidelity Multi Asset Open Defensive	Mixed Investment 0-35% Shares	GB00BC7GXK56	Low risk
JPM Multi Asset Income	Mixed Investment 20-60% Shares	GB00B4N1ZJ15	Low risk
Jupiter Corporate Bond	Sterling Corporate Bond	GB0002691805	Low risk
Merian Monthly Income Bond	Sterling Strategic Bond	GB00B1XG8187	Low risk
Morgan Stanley Sterling Corporate Bond	Sterling Corporate Bond	GB0004757497	Low risk
Rathbone Ethical Bond Fund	Sterling Corporate Bond	GB0030957137	Low risk
Threadneedle Dynamic Real Return	Targeted Absolute Return	GB00B93TQ868	Low risk
ASI Asian Pacific Growth Equity	Asia Pacific Excluding Japan	GB00B7MZSJ60	Medium risk
Baillie Gifford Global Income Growth	Global Equity Income	GB0005772586	Medium risk
Baillie Gifford Managed	Mixed Investment 40-85% Shares	GB0006010168	Medium risk
Fidelity China Consumer	China/Greater China	GB00B82ZSC67	Medium risk
Fidelity Global High Yield	Sterling High Yield	GB00B7K7SQ18	Medium risk
FSSA Greater China Growth	China/Greater China	GB0033874321	Medium risk
JPM Japan	Japan	GB00B1XMTP77	Medium risk
Liontrust Global Alpha	Flexible Investment	GB0031190555	Medium risk
MI Chelverton UK Equity Growth	UK All Companies	GB00BP855B75	Medium risk
T. Rowe Price Global Focused Growth Equity	Global	GB00BD446774	Medium risk
Allianz Total Return Asian Equity	Asia Pacific Excluding Japan	GB00B1FRQV53	High risk
Baillie Gifford European	Europe Excluding UK	GB0006058258	High risk
Baillie Gifford Global Stewardship	Global	GB00BYNK7G95	High risk
Baillie Gifford Long Term Global Growth Investment	Global	GB00BD5Z0Z54	High risk
Baillie Gifford Pacific	Asia Pacific Excluding Japan	GB0006063233	High risk
Baillie Gifford Positive Change	Global	GB00BYVGKV59	High risk
Barings Eastern Trust	Asia Pacific Excluding Japan	GB0000799923	High risk
Fidelity UK Smaller Companies	UK Smaller Companies	GB00B7VNMB18	High risk
Invesco Global Emerging Markets (UK)	Global Emerging Markets	GB00B3RW7S64	High risk
Threadneedle Global Emerging Market Equity	Global Emerging Markets	GB00B10SJD63	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:

Name	Sector	ISIN Code	Risk
ASI Sterling Inflation-Linked Bond	UK Gilts	GB00BWK27319	Low risk
Aubrey Capital Management Ltd Aubrey Global Conviction	Global	GB00B1L8XB18	High risk
AXA Framlington Global Technology	Technology & Telecommunications	GB00B4W52V57	High risk
Baillie Gifford Investment Grade Bond	Sterling Corporate Bond	GB0030816481	Low risk
Baillie Gifford Multi Asset Growth	Targeted Absolute Return	GB00BY9C5Y31	Low risk
Barclays Europe (ex-UK) Alpha	Europe Excluding UK	GB00B72WQ825	Medium risk
BMO Global Total Return Bond (GBP Hedged)	Global Bonds	GB0033145151	Low risk
Franklin US Opportunities	North America	GB00B7KCG406	Medium risk
Invesco China Equity (UK)	China/Greater China	GB00B3RW8C79	Medium risk
Invesco Global Bond (UK)	Global Bonds	GB00B3RW7B97	Low risk
Invesco Global Focus (UK)	Global	GB00B3KJYG12	High risk
JPM Asia Growth	Asia Pacific Excluding Japan	GB00B1XMSK57	Medium risk
LF Miton Cautious Multi Asset	Mixed Investment 20-60% Shares	GB00B0W1V856	Low risk
LF Miton UK Smaller Companies	UK Smaller Companies	GB00B818N094	High risk
Royal London Sustainable Managed Growth Trust	Mixed Investment 0-35% Shares	GB00B8H7XS88	Low 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 21% (11%)
Alternatives 9% (12%) - includes absolute return strategies & some bond exposure
UK Corporate Fixed Interest (i.e UK bonds) 6% (12%)
Emerging Market Fixed Income 0% (0%)
North American Equities 13% (20%)
European Equities 8% (10%)
Chinese Equities 7% (7%)
Japanese Equities 4% (4%)
Property 0% (0%)
UK Equities 9% (5%)
Gilts 0% (4%)
Cash 3% (0%)
Emerging market equities 6% (3%)
Other international equities 0% (0%)
Asian Equities 14% (12%)
Commodities and Energy 0% (0%)

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 40-60% 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.