80-20 Investor Best of the Best Selection – February 2020 Update

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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