80-20 Investor Best of the Best Selection – February 2021 Update

Commentary

Following on from a strong December performance the BOTB had a fantastic January as you can clearly see from the chart below which shows the BOTB versus the average sector performance of professionally managed mixed-asset funds with varying equity exposures as well as the FTSE 100 (just for context). January was generally considered a tough month for investors as illustrated by the negative returns from the professionally managed benchmarks below but the BOTB bucked that trend.

The biggest drivers of outperformance were holdings with exposure to technology stocks, emerging market equities as well as Asian equities, as shown in the table below. The laggards were European stocks (Baillie Gifford European fell 1.94% in January) as well as bond funds which fell in the face of rising yields and rising inflation expectations.

Fund	Total return % in Jan 2021
Allianz Total Return Asian Equity	7.91
Baillie Gifford Positive Change	7.67
Fidelity China Consumer	6.76
FSSA Greater China Growth	5.79
Baillie Gifford Long Term Global Growth Investment	5.48
Barings Eastern Trust	5.46
FP Octopus UK Micro Cap Growth	5.38
Baillie Gifford Pacific	5.37
Invesco Global Emerging Markets (UK)	5.05

It is no surprise that after such a strong month that 21 funds within the BOTB remain the same from last month. With the dollar still under pressure and the market pricing in a continued global economic rebound, commodities make an appearance via the Barings Global Agriculture fund.

The BOTB's European equity exposure has been significantly reduced, following the sector's underperformance, and there's been a slight drop in the exposure to UK equities in favour of a new direct exposure to US equities. It means that Asian and emerging markets make up the largest equity component of the BOTB's asset mix. Once again we see a mix of value-focused funds and growth funds throughout the selection. The overall equity exposure has dropped slightly from 63% last month to 61% this month.

Gilts are still an absentee within the low-risk portion of the BOTB which remains a mix of strategic bond funds, UK corporate bonds, Mixed Investment 0-35% Shares but now also high yield bonds.

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 and a half years ago.

Below I list this month's selection in full with the 21 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 Moderately Cautious	Mixed Investment 0-35% Shares	GB0033953497	Low risk
Allianz Total Return Asian Equity	Asia Pacific Excluding Japan	GB00B1FRQV53	Medium risk
ASI Strategic Bond	Sterling Strategic Bond	GB00BWK27X12	Low 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
Barclays Multi-Asset Cautious	Mixed Investment 0-35% Shares	GB00BD93Z723	Low risk
Barings Eastern Trust	Asia Pacific Excluding Japan	GB0000799923	Medium risk
Barings Global Agriculture	Specialist	GB00B3B9V927	High risk
Barings Korea Trust	Specialist	GB0000840719	High risk
Close Select Fixed Income	Sterling Strategic Bond	GB00BD6R7Y87	Low risk
Fidelity China Consumer	China/Greater China	GB00B82ZSC67	Medium risk
Fidelity Global High Yield	Sterling High Yield	GB00B7K7SQ18	Low risk
Fidelity Multi Asset Open Defensive	Mixed Investment 0-35% Shares	GB00BC7GXK56	Low risk
FP Octopus UK Micro Cap Growth	UK Smaller Companies	GB00BYQ7HN43	High risk
FSSA Greater China Growth	China/Greater China	GB0033874321	Medium risk
Invesco Global Emerging Markets (UK)	Global Emerging Markets	GB00B3RW7S64	High risk
LF Miton UK Smaller Companies	UK Smaller Companies	GB00B818N094	High risk
LF Miton UK Value Opportunities	UK All Companies	GB00B8KV0M06	High risk
Liontrust Global Alpha	Flexible Investment	GB0031190555	Medium risk
Liontrust Global Smaller Companies	Global	GB00B29MXF68	High risk
Merian Monthly Income Bond	Sterling Strategic Bond	GB00B1XG8187	Low risk
MI Chelverton UK Equity Growth	UK All Companies	GB00BP855B75	Medium risk
Premier Diversified Growth	Mixed Investment 40-85% Shares	GB00B8BJV423	Medium risk
Rathbone Ethical Bond Fund	Sterling Corporate Bond	GB0030957137	Low risk
Schroder UK Dynamic Absolute Return	Targeted Absolute Return	GB00B3N74T57	Low risk
Stewart Investors Asia Pacific Sustainability.	Specialist	GB00B0TY6V50	Medium risk
Threadneedle Dynamic Real Return	Targeted Absolute Return	GB00B93TQ868	Low risk
VT Tyndall North American	North America	GB00BYPZY050	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
7IM Moderately Cautious	Mixed Investment 0-35% Shares	GB0033953497	Low risk
ASI Strategic Bond	Sterling Strategic Bond	GB00BWK27X12	Low risk
Barclays Multi-Asset Cautious	Mixed Investment 0-35% Shares	GB00BD93Z723	Low risk
Close Select Fixed Income	Sterling Strategic Bond	GB00BD6R7Y87	Low risk
Fidelity Global High Yield	Sterling High Yield	GB00B7K7SQ18	Low risk
Fidelity Multi Asset Open Defensive	Mixed Investment 0-35% Shares	GB00BC7GXK56	Low risk
Merian Monthly Income Bond	Sterling Strategic Bond	GB00B1XG8187	Low risk
Rathbone Ethical Bond Fund	Sterling Corporate Bond	GB0030957137	Low risk
Schroder UK Dynamic Absolute Return	Targeted Absolute Return	GB00B3N74T57	Low risk
Threadneedle Dynamic Real Return	Targeted Absolute Return	GB00B93TQ868	Low risk
Allianz Total Return Asian Equity	Asia Pacific Excluding Japan	GB00B1FRQV53	Medium risk
Baillie Gifford Managed	Mixed Investment 40-85% Shares	GB0006010168	Medium risk
Barings Eastern Trust	Asia Pacific Excluding Japan	GB0000799923	Medium risk
Fidelity China Consumer	China/Greater China	GB00B82ZSC67	Medium risk
FSSA Greater China Growth	China/Greater China	GB0033874321	Medium risk
Liontrust Global Alpha	Flexible Investment	GB0031190555	Medium risk
MI Chelverton UK Equity Growth	UK All Companies	GB00BP855B75	Medium risk
Premier Diversified Growth	Mixed Investment 40-85% Shares	GB00B8BJV423	Medium risk
Stewart Investors Asia Pacific Sustainability.	Specialist	GB00B0TY6V50	Medium risk
VT Tyndall North American	North America	GB00BYPZY050	Medium 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 Global Agriculture	Specialist	GB00B3B9V927	High risk
Barings Korea Trust	Specialist	GB0000840719	High risk
FP Octopus UK Micro Cap Growth	UK Smaller Companies	GB00BYQ7HN43	High risk
Invesco Global Emerging Markets (UK)	Global Emerging Markets	GB00B3RW7S64	High risk
LF Miton UK Smaller Companies	UK Smaller Companies	GB00B818N094	High risk
LF Miton UK Value Opportunities	UK All Companies	GB00B8KV0M06	High risk
Liontrust Global Smaller Companies	Global	GB00B29MXF68	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
Baillie Gifford European	Europe Excluding UK	GB0006058258	Medium risk
Baillie Gifford Global Stewardship	Global	GB00BYNK7G95	High risk
BNY Mellon Real Return	Targeted Absolute Return	GB0001642635	Low risk
Fidelity UK Smaller Companies	UK Smaller Companies	GB00B7VNMB18	High risk
LF Miton Defensive Multi Asset	Mixed Investment 0-35% Shares	GB00B0525B66	Low risk
Royal London Corporate Bond	Sterling Corporate Bond	GB00B87FJ401	Low risk
Royal London Sustainable Managed Growth Trust	Mixed Investment 0-35% Shares	GB00B8H7XS88	Low risk
T. Rowe Price Global Focused Growth Equity	Global	GB00BD446774	Medium risk
VT Gravis Clean Energy Income	Global	GB00BFN4H792	Medium 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 17% (14%)
• Alternatives 12% (13%) - includes absolute return strategies & some bond exposure
• UK Corporate Fixed Interest (i.e UK bonds) 5% (7%)
• Emerging Market Fixed Income 0% (0%)
• North American Equities 14% (11%)
• European Equities 3% (8%)
• Chinese Equities 7% (7%)
• Japanese Equities 0% (0%)
• Property 0% (0%)
• UK Equities 15% (20%)
• Gilts 0% (0%)
• Cash 4% (3%)
• Emerging market equities 4% (3%)
• Other international equities 0% (0%)
• Asian Equities 15% (14%)
• Commodities and Energy 4% (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.

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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