Commentary
16 funds from last month's 30 Best of the Best Selection regained their position in February's shortlist. January pretty much followed where December left off as it was again a very good month for the 80-20 Investor BOTB Selection. It therefore comes as no surprise that so many funds retained their position. Those that didn't were mostly just outside the shortlist and a number remain in the Best Funds by Sector lists. If you assumed someone held all of the funds in the portfolio then the return was 1.32% for January compared to -0.57% for the FTSE 100 and between +0.24% and +0.57% for the average multi asset fund. At the foot of this article you can see how the 80-20 Investor Portfolio has continued to outperform the professional fund managers as well as the market since its launch over two and a half years ago.
It's interesting that this month's update of the BOTB includes one Asian fund. However a number of others just missed out, boosted by a strong January. If you recall last month there was no Asian or emerging market exposure at all. The omission didn't have too much of a negative impact because the smaller companies funds that replaced them also performed well. If Asian equities continue to do well then I expect to see more of them back in the fold soon. If you look at this month's heatmap update you can see that risk (equities) was rewarded in January while perceived safer assets struggled comparatively despite the markets becoming unsettled at the end of the month by Donald Trump's endless executive orders. I was quite pleased to see that the Selection as a whole held up well despite the pound rallying against the dollar during the month (as we got more clarity over Brexit and the dollar weakened) which usually hits any overseas funds that you invest in. Overseas fund holdings in dollars immediately reduce in sterling value terms when the pound strengthens.
The new BOTB's bond holdings are now exclusively UK high yield bond funds that tend to have a lower duration, which has remained favourable in this environment. Elsewhere a number of mixed asset funds have crept back into the low risk end of the BOTB list which is perhaps reflective of the erratic nature of markets where any one asset class is often the victim of a Trump attack. The cash allocation of the BOTB remains at 8% as fund managers seek a low risk alternative to holding bonds. There is also an increased weighting to alternative investment strategies such as absolute return. In terms of direct equity exposure the portfolio is now around 70% which is up on last month.
One final thing to note is that two of the retained funds (BlackRock US Dynamic and Schroder - European Alpha Plus) have dropped from the high risk category to the medium risk category. This is almost certainly a reflection of the historically low level of volatility and narrow trading range US equities have experienced of late compared to other equity markets.
Below I list this month's selection in full with the 16 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.
February'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 Level |
| 7IM - Unconstrained | Targeted Absolute Return | GB00B75MS619 | Low risk |
| Artemis - Monthly Distribution | Mixed Investment 20%-60% Shares | GB00B6TK3R06 | Low risk |
| Artemis - Strategic Assets | Flexible Investment | GB00B3VDD431 | Medium risk |
| AXA - Global High Income | Sterling High Yield | GB00B0T9V375 | Low risk |
| Baillie Gifford - Japanese | Japan | GB0006011133 | High risk |
| BlackRock - US Dynamic | North America | GB00B87XJQ69 | Medium risk |
| Cavendish - AIM | UK Smaller Companies | GB00B0JX3X39 | High risk |
| Cavendish - Opportunities | UK All Companies | GB0032212283 | High risk |
| Cavendish - Technology | Technology & Telecom | GB00B60SMN24 | High risk |
| CF - Morant Wright Japan | Japan | GB0033010017 | High risk |
| Fidelity - Global High Yield | Sterling High Yield | GB00B7K7SQ18 | Low risk |
| FP - Apollo Multi Asset Cautious | Mixed Investment 20%-60% Shares | GB00B3FPDY55 | Low risk |
| Henderson - Global Technology | Technology & Telecom | GB0007698847 | High risk |
| IFSL - Brooks Macdonald Defensive Capital | Targeted Absolute Return | GB00B61MR835 | Low risk |
| Investec - Cautious Managed | Mixed Investment 20%-60% Shares | GB00B8NZ3M08 | Low risk |
| JOHCM - UK Equity Income | UK Equity Income | GB00B03KR500 | Medium risk |
| Jupiter - UK Smaller Companies | UK Smaller Companies | GB0004911870 | High risk |
| M&G - Global Dividend | Global | GB00B46J9127 | Medium risk |
| M&G - Recovery | UK All Companies | GB00B7759Y38 | Medium risk |
| Man GLG - Japan Core Alpha | Japan | GB00B3F46Y30 | High risk |
| Marlborough - European Multi-Cap | Europe Excluding UK | GB0001719730 | Medium risk |
| Marlborough - Far East Growth | Asia Pacific Excluding Japan | GB00B0NVCN62 | High risk |
| Old Mutual - Cirilium Moderate | Mixed Investment 40%-85% Shares | GB00B2Q8TP98 | Low risk |
| Premier - Diversified | Mixed Investment 40%-85% Shares | GB00B8BJV423 | Low risk |
| R&M - UK Equity High Alpha | UK All Companies | GB00B3D79W34 | Medium risk |
| Schroder - European Alpha Plus | Europe Excluding UK | GB00B7LDKR32 | Medium risk |
| Schroder - Global Equity Income | Global | GB00B76V7M69 | Medium risk |
| Schroder - Monthly High Income | Sterling High Yield | GB00B83RDY83 | Low risk |
| Wise Investments - TB Wise Investment | Flexible Investment | GB0034272533 | Medium risk |
February's Best of the Best Selection - (grouped by risk)
Here is February'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 Level |
| 7IM - Unconstrained | Targeted Absolute Return | GB00B75MS619 | Low risk |
| Artemis - Monthly Distribution | Mixed Investment 20%-60% Shares | GB00B6TK3R06 | Low risk |
| AXA - Global High Income | Sterling High Yield | GB00B0T9V375 | Low risk |
| Fidelity - Global High Yield | Sterling High Yield | GB00B7K7SQ18 | Low risk |
| FP - Apollo Multi Asset Cautious | Mixed Investment 20%-60% Shares | GB00B3FPDY55 | Low risk |
| IFSL - Brooks Macdonald Defensive Capital | Targeted Absolute Return | GB00B61MR835 | Low risk |
| Investec - Cautious Managed | Mixed Investment 20%-60% Shares | GB00B8NZ3M08 | Low risk |
| Old Mutual - Cirilium Moderate | Mixed Investment 40%-85% Shares | GB00B2Q8TP98 | Low risk |
| Premier - Diversified | Mixed Investment 40%-85% Shares | GB00B8BJV423 | Low risk |
| Schroder - Monthly High Income | Sterling High Yield | GB00B83RDY83 | Low risk |
| Artemis - Strategic Assets | Flexible Investment | GB00B3VDD431 | Medium risk |
| BlackRock - US Dynamic | North America | GB00B87XJQ69 | Medium risk |
| JOHCM - UK Equity Income | UK Equity Income | GB00B03KR500 | Medium risk |
| M&G - Global Dividend | Global | GB00B46J9127 | Medium risk |
| M&G - Recovery | UK All Companies | GB00B7759Y38 | Medium risk |
| Marlborough - European Multi-Cap | Europe Excluding UK | GB0001719730 | Medium risk |
| R&M - UK Equity High Alpha | UK All Companies | GB00B3D79W34 | Medium risk |
| Schroder - European Alpha Plus | Europe Excluding UK | GB00B7LDKR32 | Medium risk |
| Schroder - Global Equity Income | Global | GB00B76V7M69 | Medium risk |
| Wise Investments - TB Wise Investment | Flexible Investment | GB0034272533 | Medium risk |
| Baillie Gifford - Japanese | Japan | GB0006011133 | High risk |
| Cavendish - AIM | UK Smaller Companies | GB00B0JX3X39 | High risk |
| Cavendish - Opportunities | UK All Companies | GB0032212283 | High risk |
| Cavendish - Technology | Technology & Telecom | GB00B60SMN24 | High risk |
| CF - Morant Wright Japan | Japan | GB0033010017 | High risk |
| Henderson - Global Technology | Technology & Telecom | GB0007698847 | High risk |
| Jupiter - UK Smaller Companies | UK Smaller Companies | GB0004911870 | High risk |
| Man GLG - Japan Core Alpha | Japan | GB00B3F46Y30 | High risk |
| Marlborough - Far East Growth | Asia Pacific Excluding Japan | GB00B0NVCN62 | 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 - Global Income | Global Equity Income | GB00B5N99561 | Medium risk |
| Artemis - High Income | Sterling Strategic Bond | GB00B2PLJN71 | Low risk |
| AXA - Framlington Managed Income | Sterling Strategic Bond | GB00B6RPX228 | Low risk |
| CF Canlife - Global High Yield Bond | Global Bonds | GB00B9J56009 | Low risk |
| GAM - Global Diversified | Global | GB0002426640 | Medium risk |
| GAM - North American Growth | North America | GB0002423852 | High risk |
| Insight - Inflation Linked Corporate Bond | Sterling Strategic Bond | GB00B8CJGZ73 | Low risk |
| Invesco Perpetual - Global Equity | Global | GB00B8N45Y36 | High risk |
| L&G - Global Technology Index Trust | Technology & Telecom | GB00B0CNH163 | High risk |
| Old Mutual - Cirilium Balanced | Mixed Investment 20%-60% Shares | GB00B2Q8V089 | Medium risk |
| Old Mutual - Cirilium Conservative | Mixed Investment 0%-35% Shares | GB00B4LTHW43 | Low risk |
| TB Saracen - Global Income & Growth | Global Equity Income | GB00B8MG4091 | Medium risk |
| Templeton - Growth | Global | GB00B7K6LK38 | High risk |
| Unicorn - UK Smaller Companies | UK Smaller Companies | GB0031785065 | 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 12% (19%)
- Alternatives 10% (14%) - mostly absolute return strategies
- UK Corporate Fixed Interest (i.e UK bonds) 2% (3%)
- North American Equities 12% (17%)
- European Equities 9% (11%)
- Japanese Equities 11% (9%)
- Property 0% (0%)
- UK Equities 24% (19%)
- Cash 8% (8%)
- Asian equities 0% (0%)
- Asia Pacific Emerging equities 0% (0%)
- Other international equities 12% (0%) which includes Asian equities
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.
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