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

Commentary

January was a strong month for the BOTB as a whole with the average return of 1.26% in a month that started strongly but began to be buffeted by the headwinds emanating from the bond market, as discussed in February's monthly newsletter. To give this some context, the average managed fund from the Mixed Investment 40-85% Shares sector barely made 0.16% while the FTSE 100 fell 1.96% as the rally in the pound started to bite.

Despite the bond market weakness seeping into equity markets it is good to see that 15 of last month's BOTB funds remain in this month's BOTB selection. Of those funds that are new many are familiar from past months' BOTB selections. The aforementioned bond weakness and rotation into other assets, including equities, shows in the low-risk portion of this month's BOTB with fewer bond funds and more multi-asset and targeted return funds. Elsewhere the US stock market has fared better than many of its peers during the recent market wobble and this helps explain why the US equity funds are now classed as medium risk rather than high risk. The weak dollar has seen the pound rally which has put pressure on UK equities and there is a slightly lower exposure in this month's BOTB than last month's. Unsurprisingly more generally currency-hedged funds have retained their positions.

European equities have made a reappearance and it will be interesting to see how they fare if the euro continues to strengthen vs the dollar. The weak dollar versus the Japanese yen has hurt Japanese stocks and there is a slightly reduced exposure this month. However, the weak dollar has helped emerging market equities. In terms of direct equity exposure the BOTB's exposure now sits around 67% which is marginally up on last month, perhaps reflective of the rotation out of bonds into equities we've seen at times in the market. 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 more than three 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.

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
7IM US Equity Value	North America	GB00BWBSHX88	Medium risk
Aberdeen Diversified Core Growth	Mixed Investment 20-60% Shares	GB00BVTW3820	Low risk
Artemis European Growth	Europe Excluding UK	GB00B2PLJD73	Medium risk
AXA Framlington Japan	Japan	GB00BRJZVR88	High risk
Baillie Gifford American	North America	GB0006061963	Medium risk
Baillie Gifford UK Equity Alpha	UK All Companies	GB0005858195	Medium risk
Barclays Adventurous Growth Portfolio	Flexible Investment	GB00B6ZSRL05	Low risk
Barclays Balanced Portfolio	Mixed Investment 20-60% Shares	GB00B6T5CT00	Low risk
Barclays High Income Portfolio	Mixed Investment 20-60% Shares	GB00B68F5S16	Low risk
Baring Eastern Trust	Asia Pacific Excluding Japan	GB0000799923	High risk
F&C Property Growth and Income	Property	GB00BQWJ8687	Low risk
Fidelity China Consumer	China/Greater China	GB00B82ZSC67	High risk
FP Apollo Multi Asset Balanced	Mixed Investment 20-60% Shares	GB00B3FPF276	Low risk
FP Apollo Multi Asset Cautious	Mixed Investment 20-60% Shares	GB00B3FPDY55	Low risk
FP Pictet Multi Asset Portfolio	Targeted Absolute Return	GB00BVYTTC41	Low risk
Janus Henderson China Opportunities	China/Greater China	GB0031860934	High risk
JOHCM UK Equity Income	UK Equity Income	GB00B03KR500	Medium risk
JPM Asia Growth	Asia Pacific Excluding Japan	GB0030879695	High risk
JPM Global Macro Balanced	Mixed Investment 0-35% Shares	GB00B09RGK38	Low risk
Jupiter China	China/Greater China	GB00B1DTDX49	High risk
Jupiter UK Smaller Companies	UK Smaller Companies	GB0004911870	High risk
LF Miton European Opportunities	Europe Excluding UK	GB00BZ2K2M84	Medium risk
Man GLG UK Income	UK Equity Income	GB00B0117B11	Medium risk
MI Chelverton UK Equity Growth	UK All Companies	GB00BP855B75	High risk
Neptune Emerging Markets	Global Emerging Markets	GB00B8J6SV12	High risk
Neptune Global Equity	Global	GB00B8DLY478	Medium risk
Neptune Japan Opportunities	Japan	GB00B3Z0Y815	Medium risk
Sarasin Global Dividend (Sterling Hedged)	Global Equity Income	GB00BGDF8439	Medium risk
UBS Global Emerging Markets Equity	Global Emerging Markets	GB00B7L34154	High risk
VT Turcan Connell Absolute Return Portfolio	Targeted Absolute Return	GB00B4QPB031	Low 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
Aberdeen Diversified Core Growth	Mixed Investment 20-60% Shares	GB00BVTW3820	Low risk
Barclays Adventurous Growth Portfolio	Flexible Investment	GB00B6ZSRL05	Low risk
Barclays Balanced Portfolio	Mixed Investment 20-60% Shares	GB00B6T5CT00	Low risk
Barclays High Income Portfolio	Mixed Investment 20-60% Shares	GB00B68F5S16	Low risk
F&C Property Growth and Income	Property	GB00BQWJ8687	Low risk
FP Apollo Multi Asset Balanced	Mixed Investment 20-60% Shares	GB00B3FPF276	Low risk
FP Apollo Multi Asset Cautious	Mixed Investment 20-60% Shares	GB00B3FPDY55	Low risk
FP Pictet Multi Asset Portfolio	Targeted Absolute Return	GB00BVYTTC41	Low risk
JPM Global Macro Balanced	Mixed Investment 0-35% Shares	GB00B09RGK38	Low risk
VT Turcan Connell Absolute Return Portfolio	Targeted Absolute Return	GB00B4QPB031	Low risk
7IM US Equity Value	North America	GB00BWBSHX88	Medium risk
Artemis European Growth	Europe Excluding UK	GB00B2PLJD73	Medium risk
Baillie Gifford American	North America	GB0006061963	Medium risk
Baillie Gifford UK Equity Alpha	UK All Companies	GB0005858195	Medium risk
JOHCM UK Equity Income	UK Equity Income	GB00B03KR500	Medium risk
LF Miton European Opportunities	Europe Excluding UK	GB00BZ2K2M84	Medium risk
Man GLG UK Income	UK Equity Income	GB00B0117B11	Medium risk
Neptune Global Equity	Global	GB00B8DLY478	Medium risk
Neptune Japan Opportunities	Japan	GB00B3Z0Y815	Medium risk
Sarasin Global Dividend (Sterling Hedged)	Global Equity Income	GB00BGDF8439	Medium risk
AXA Framlington Japan	Japan	GB00BRJZVR88	High risk
Baring Eastern Trust	Asia Pacific Excluding Japan	GB0000799923	High risk
Fidelity China Consumer	China/Greater China	GB00B82ZSC67	High risk
Janus Henderson China Opportunities	China/Greater China	GB0031860934	High risk
JPM Asia Growth	Asia Pacific Excluding Japan	GB0030879695	High risk
Jupiter China	China/Greater China	GB00B1DTDX49	High risk
Jupiter UK Smaller Companies	UK Smaller Companies	GB0004911870	High risk
MI Chelverton UK Equity Growth	UK All Companies	GB00BP855B75	High risk
Neptune Emerging Markets	Global Emerging Markets	GB00B8J6SV12	High risk
UBS Global Emerging Markets Equity	Global Emerging Markets	GB00B7L34154	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
Baillie Gifford Japanese	Japan	GB0006011133	High risk
Baillie Gifford Pacific	Asia Pacific Excluding Japan	GB0006063233	High risk
BlackRock US Dynamic	North America	GB00B87XJQ69	Medium risk
CFP SDL UK Buffettology	UK All Companies	GB00B3QQFJ66	Medium risk
EdenTree Amity Sterling Bond	Sterling Strategic Bond	GB00B2PF8D20	Low risk
Insight Global Absolute Return	Targeted Absolute Return	GB00B86R4N19	Low risk
JPM US	North America	GB0030878846	Medium risk
L&G High Income Trust	Sterling High Yield	GB00B0CNHJ41	Low risk
MI Chelverton UK Equity Income	UK Equity Income	GB00B1Y9J570	Medium risk
Premier Diversified	Mixed Investment 40-85% Shares	GB00B8BJV423	Low risk
Premier Global Alpha Growth	Global	GB00B6740K61	Medium risk
Schroder High Yield Opportunities	Sterling High Yield	GB00B83RDY83	Low risk
Standard Life Investments Dynamic Distribution	Mixed Investment 20-60% Shares	GB00B7CMQ047	Low risk
Threadneedle China Opportunities	China/Greater China	GB00B1PRW734	High risk
TM Cavendish AIM	UK Smaller Companies	GB00B0JX3Z52	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 8% (12%)
• Alternatives 19% (13%) - includes absolute return strategies & property
• UK Corporate Fixed Interest (i.e UK bonds) 0% (0%)
• Emerging Market Fixed Interest 0% (0%)
• North American Equities 11% (11%)
• European Equities 6% (0%)
• Japanese Equities 7% (11%)
• Property 0% (0%)
• UK Equities 17% (19%)
• Cash 6% (4%)
• Asian equities 7% (9%)
• Asia Pacific Emerging equities 13% (11%)
• Other international equities 6% (10%)

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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