Commentary
January was a strong month for the BOTB as investment markets tried to grapple firstly with the US-Iran tensions and secondly with the coronavirus outbreak in China. As the chart below shows the average return of the BOTB in January was 0.61% which compared favourably to that of the average professionally managed fund from the Mixed Investment 20-60% Shares sector (-0.05%) and the Mixed Investment 40-85% Shares sector (-0.40%).
The table below shows the standout performers within the BOTB for the month of January. Baillie Gifford Positive Change once again makes the cut. Interestingly the fund has a 6% exposure to Tesla, whose share price has doubled in a January alone. This is surely some kind of mania and I wouldn’t be surprised to see some kind of pullback in the company’s share price.
On the other end of the spectrum the worst performing fund in last month’s BOTB was First State Japan Focus which fell over 4% in the wake of the coronavirus-induced Asian equity sell-off.
| Name | Performance % January 2020 |
| Baillie Gifford Positive Change | 4.95 |
| Schroder Sterling Corporate Bond | 3.22 |
| Liontrust Sustainable Future Corporate Bond | 2.37 |
| Royal London Sustainable Diversified Trust | 2.01 |
| Sarasin Responsible Global Equity (Sterling Hedged) | 1.75 |
Unsurprisingly 20 of the funds from January's BOTB retain their place in this month's BOTB while there is now no exposure at all to Asian, Japanese, Chinese or emerging market equities. Interestingly the bond and gilt exposure has increased while the exposure to equities has dropped from 63% to 57%. There are signs of increased caution and a move from east to west in February's BOTB equity exposure (a result of the coronavirus sell-off).
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 20 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 |
| ASI (AAM) UK Smaller Companies | UK Smaller Companies | GB00B07T4859 | High risk |
| ASI European Real Estate Share | Property Other | GB00BWK26907 | High risk |
| ASI Sterling Bond | Global Bonds | GB00BWK27087 | Medium risk |
| ASI UK Real Estate Share | Property Other | GB00B0XWNN66 | High risk |
| AXA Ethical Distribution | Mixed Investment 20-60% Shares | GB0005409262 | Low risk |
| Baillie Gifford Positive Change | Global | GB00BYVGKV59 | High risk |
| Barings Strategic Bond | Global Bonds | GB0000831759 | Medium risk |
| Close FTSE techMARK | Technology & Telecommunications | GB00B87JKQ15 | High risk |
| Fidelity Moneybuilder Balanced | Mixed Investment 40-85% Shares | GB00B7XJFX07 | Low risk |
| GAM Credit Opportunities GBP | Sterling Strategic Bond | GB00BYQJ5G92 | Low risk |
| JPM UK Smaller Companies | UK Smaller Companies | GB0030880255 | High risk |
| Kames Ethical Cautious Managed | Mixed Investment 20-60% Shares | GB00B1N9DX45 | Low risk |
| LF Gresham House UK Multi Cap Income | UK Equity Income | GB00BYXVGS75 | High risk |
| Liontrust European Enhanced Income (Hedged) | Europe Excluding UK | GB00BD2WZ873 | Medium risk |
| Liontrust Sustainable Future Corporate Bond | Sterling Corporate Bond | GB0030029069 | Low risk |
| M&G Global Listed Infrastructure | Global | GB00BF00R928 | Medium risk |
| Merian Monthly Income Bond | Sterling Strategic Bond | GB00B1XG8187 | Low risk |
| Premier Diversified Income | Mixed Investment 20-60% Shares | GB00BYPDV863 | Low risk |
| Premier Ethical | UK All Companies | GB0004073002 | High risk |
| Royal London Sustainable Diversified Trust | Mixed Investment 20-60% Shares | GB00B844WJ68 | Low 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 | Medium risk |
| Schroder Sterling Corporate Bond | Sterling Corporate Bond | GB0009379370 | Low risk |
| Schroder Strategic Bond | Sterling Strategic Bond | GB00B7FPS593 | Low risk |
| Slater Growth | UK All Companies | GB00B0706C66 | Medium risk |
| UBS S&P 500 Index | North America | GB00BMN91T34 | High risk |
| Vanguard UK Long Duration Gilt Index | UK Gilts | GB00B4M89245 | High risk |
| VT Gravis Clean Energy Income | Global | GB00BFN4H792 | 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 |
| AXA Ethical Distribution | Mixed Investment 20-60% Shares | GB0005409262 | Low risk |
| Fidelity Moneybuilder Balanced | Mixed Investment 40-85% Shares | GB00B7XJFX07 | Low risk |
| GAM Credit Opportunities GBP | Sterling Strategic Bond | GB00BYQJ5G92 | Low risk |
| Kames Ethical Cautious Managed | Mixed Investment 20-60% Shares | GB00B1N9DX45 | Low risk |
| Liontrust Sustainable Future Corporate Bond | Sterling Corporate Bond | GB0030029069 | 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 |
| Schroder Sterling Corporate Bond | Sterling Corporate Bond | GB0009379370 | Low risk |
| Schroder Strategic Bond | Sterling Strategic Bond | GB00B7FPS593 | Low risk |
| ASI Sterling Bond | Global Bonds | GB00BWK27087 | Medium risk |
| Barings Strategic Bond | Global Bonds | GB0000831759 | Medium risk |
| Liontrust European Enhanced Income (Hedged) | Europe Excluding UK | GB00BD2WZ873 | Medium risk |
| M&G Global Listed Infrastructure | Global | GB00BF00R928 | 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 | Medium risk |
| Slater Growth | UK All Companies | GB00B0706C66 | Medium risk |
| VT Gravis Clean Energy Income | Global | GB00BFN4H792 | Medium risk |
| ASI (AAM) UK Smaller Companies | UK Smaller Companies | GB00B07T4859 | High risk |
| ASI European Real Estate Share | Property Other | GB00BWK26907 | High risk |
| ASI UK Real Estate Share | Property Other | GB00B0XWNN66 | High risk |
| Baillie Gifford Positive Change | Global | GB00BYVGKV59 | High risk |
| Close FTSE techMARK | Technology & Telecommunications | GB00B87JKQ15 | High risk |
| JPM UK Smaller Companies | UK Smaller Companies | GB0030880255 | High risk |
| LF Gresham House UK Multi Cap Income | UK Equity Income | GB00BYXVGS75 | High risk |
| Premier Ethical | UK All Companies | GB0004073002 | High risk |
| UBS S&P 500 Index | North America | GB00BMN91T34 | High risk |
| Vanguard UK Long Duration Gilt Index | UK Gilts | GB00B4M89245 | 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 |
| Artemis UK Smaller Companies | UK Smaller Companies | GB00B2PLJL57 | High risk |
| Baillie Gifford Pacific | Asia Pacific Excluding Japan | GB0006063233 | High risk |
| First State Japan Focus | Japan | GB00BWNGX432 | High risk |
| Invesco High Yield (UK) | Sterling High Yield | GB00B3RW7649 | Low risk |
| Jupiter Japan Income | Japan | GB00B0HZTZ55 | Medium risk |
| Margetts Sentinel Income Portfolio | Mixed Investment 20-60% Shares | GB00BZ0P5485 | Low risk |
| MI Downing Monthly Income | UK Equity Income | GB00B61JRG28 | Medium risk |
| Premier Diversified Growth | Mixed Investment 40-85% Shares | GB00B8BJV423 | Medium risk |
| Schroder Global Healthcare | Global | GB00B76V7Q08 | High risk |
| Schroder UK Dynamic Absolute Return | Targeted Absolute Return | GB00B3N74T57 | 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 14% (17%)
- Alternatives 12% (11%) - includes absolute return strategies & some bond exposure
- UK Corporate Fixed Interest (i.e UK bonds) 6% (4%)
- Emerging Market Fixed Income 0% (0%)
- North American Equities 8% (6%)
- European Equities 8% (9%)
- Japanese Equities 0% (7%)
- Property 7% (7%)
- UK Equities 25% (25%)
- Gilts 6% (0%)
- Cash 5% (5%)
- Emerging market equities 0% (0%)
- Other international equities 6% (3%)
- Asian Equities 0% (3%)
- Commodities and Energy 3% (3%)
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 outperformed the average managed fund and the market.
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