Commentary
Of the 30 funds in January’s BOTB, only 9 funds have retained their place in February’s selection, which is one of the lowest levels of consistency since I’ve been running 80-20 Investor. It is a reflection of the rapid repricing of assets as investors grow increasingly concerned over how aggressively central banks will remove monetary stimulus, especially in the US. The chart below shows the average performance of the BOTB during January against a benchmark that is calculated using the respective sector averages for each fund in the BOTB and assuming the same asset mix.
The performance is a reflection of the equity and bond market sell-off we saw across markets, as highlighted by the chart below showing the price moves of key stock market indices during January. The BOTB was hampered by its exposure to technology stocks which struggled as concerns grew of the increasingly hawkish stance of most global central banks.
In fact, if you look at the performance of all 1270+ unit trust funds we analyse as part of 80-20 Investor, 90% of them lost money in January. And that is irrespective of the asset that they invest in. Those funds that managed to finish in profit were largely invested in UK equity funds. The chart below shows the top five performers from January's BOTB. It is pleasing to see that the top three funds are within my own £50k portfolio.
| Fund | % return in January |
| BlackRock Natural Resources Growth & Income | 5.68 |
| Invesco UK Opportunities (UK) | 3.64 |
| BM SVS Brooks Macdonald Defensive Capital | -0.9 |
| Premier Miton Multi-Asset Monthly Income | -0.93 |
| Artemis Monthly Distribution | -1.08 |
At the other end of the scale, those funds that experienced the worst of the market slump had exposure to technology stocks
| Fund | % return in January |
| Royal London Global Sustainable Equity | -10.63 |
| Stewart Investors Worldw. Lead. Sust. | -12.19 |
| AXA Framlington Global Technology | -13.18 |
| ASI UK Smaller Companies | -13.41 |
| Liontrust Global Technology | -14.21 |
This month's selection saw a radical change in constituents but also an overall decrease in equity exposure, falling from 70% to 63%. The biggest change was an increased exposure to UK equities at the expense of US equities. Interestingly there is now a small exposure to Japanese equities and also an increased exposure to commodities. The low-risk end of the selection still has an absence of bond funds, focusing instead on targeted absolute return funds and mixed asset funds.
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 seven years ago.
Below I list this month's selection in full with the 9 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 |
| Artemis Monthly Distribution | Mixed Investment 20-60% Shares | GB00B6TK3R06 | Low risk |
| Artemis SmartGARP European Equity | Europe Excluding UK | GB00B2PLJD73 | High risk |
| BlackRock Natural Resources Growth & Income | Commodity/Natural Resources | GB00B6865B79 | High risk |
| BM SVS Brooks Macdonald Defensive Capital | Targeted Absolute Return | GB00B61MR835 | Low risk |
| CFP Castlefield Real Return | Targeted Absolute Return | GB00B12V1482 | Low risk |
| Close Diversified Income Portfolio | Mixed Investment 20-60% Shares | GB00B708TJ43 | Low risk |
| EdenTree Responsible & Sustainable Managed Income | Mixed Investment 40-85% Shares | GB0009449710 | Medium risk |
| Fidelity American Special Situations | North America | GB00B89ST706 | Medium risk |
| Fidelity Index US | North America | GB00BJS8SH10 | High risk |
| GAM UK Equity Income | UK Equity Income | GB00BF7M7V38 | High risk |
| Invesco UK Opportunities (UK) | UK All Companies | GB00B1W7HM62 | Medium risk |
| JPM US Equity Income | North America | GB00B3FJQ151 | Medium risk |
| Man GLG Japan Core Alpha | Japan | GB00B3F46Y30 | High risk |
| Margetts Providence Strategy | Mixed Investment 20-60% Shares | GB00B4VR6328 | Low risk |
| MI Thornbridge Global Opportunities | Global | GB00B5TP8W88 | Medium risk |
| Premier Miton Defensive Growth | Targeted Absolute Return | GB00B832BD89 | Low risk |
| Premier Miton Multi-Asset Monthly Income | Mixed Investment 20-60% Shares | GB00B7GGPC79 | Low risk |
| Royal London Diversified Asset-Backed Securities | Targeted Absolute Return | GB00B4K6P774 | Low risk |
| Royal London GMAP Balanced | Mixed Investment 20-60% Shares | GB00BD8RSQ51 | Low risk |
| Royal London UK Income With Growth Trust | Mixed Investment 40-85% Shares | GB0001598050 | Medium risk |
| Sarasin Global Higher Dividend | Global Equity Income | GB00B84ZSV39 | High risk |
| Schroder European Recovery | Europe Excluding UK | GB0007221889 | High risk |
| Schroder Global Equity Income | Global Equity Income | GB00B76V7M69 | High risk |
| Schroder Income | UK Equity Income | GB00B3PM1190 | Medium risk |
| Schroder Recovery | UK All Companies | GB00B3VVG600 | Medium risk |
| Stewart Investors Indian Subcontinent Sustainability | India/Indian Subcontinent | GB00B1FXTG93 | High risk |
| TB Guinness Global Energy | Commodity/Natural Resources | GB00B56FW078 | High risk |
| Thesis TM Tellworth UK Select | Targeted Absolute Return | GB00BNY7YM73 | Low risk |
| Vanguard FTSE UK Equity Income Index | UK Equity Income | GB00B59G4H82 | Medium risk |
| Wise Funds Limited TB Wise Multi-Asset Income | Flexible Investment | GB00B0LJ0160 | 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 |
| Artemis Monthly Distribution | Mixed Investment 20-60% Shares | GB00B6TK3R06 | Low risk |
| BM SVS Brooks Macdonald Defensive Capital | Targeted Absolute Return | GB00B61MR835 | Low risk |
| CFP Castlefield Real Return | Targeted Absolute Return | GB00B12V1482 | Low risk |
| Close Diversified Income Portfolio | Mixed Investment 20-60% Shares | GB00B708TJ43 | Low risk |
| Margetts Providence Strategy | Mixed Investment 20-60% Shares | GB00B4VR6328 | Low risk |
| Premier Miton Defensive Growth | Targeted Absolute Return | GB00B832BD89 | Low risk |
| Premier Miton Multi-Asset Monthly Income | Mixed Investment 20-60% Shares | GB00B7GGPC79 | Low risk |
| Royal London Diversified Asset-Backed Securities | Targeted Absolute Return | GB00B4K6P774 | Low risk |
| Royal London GMAP Balanced | Mixed Investment 20-60% Shares | GB00BD8RSQ51 | Low risk |
| Thesis TM Tellworth UK Select | Targeted Absolute Return | GB00BNY7YM73 | Low risk |
| EdenTree Responsible & Sustainable Managed Income | Mixed Investment 40-85% Shares | GB0009449710 | Medium risk |
| Fidelity American Special Situations | North America | GB00B89ST706 | Medium risk |
| Invesco UK Opportunities (UK) | UK All Companies | GB00B1W7HM62 | Medium risk |
| JPM US Equity Income | North America | GB00B3FJQ151 | Medium risk |
| MI Thornbridge Global Opportunities | Global | GB00B5TP8W88 | Medium risk |
| Royal London UK Income With Growth Trust | Mixed Investment 40-85% Shares | GB0001598050 | Medium risk |
| Schroder Income | UK Equity Income | GB00B3PM1190 | Medium risk |
| Schroder Recovery | UK All Companies | GB00B3VVG600 | Medium risk |
| Vanguard FTSE UK Equity Income Index | UK Equity Income | GB00B59G4H82 | Medium risk |
| Wise Funds Limited TB Wise Multi-Asset Income | Flexible Investment | GB00B0LJ0160 | Medium risk |
| Artemis SmartGARP European Equity | Europe Excluding UK | GB00B2PLJD73 | High risk |
| BlackRock Natural Resources Growth & Income | Commodity/Natural Resources | GB00B6865B79 | High risk |
| Fidelity Index US | North America | GB00BJS8SH10 | High risk |
| GAM UK Equity Income | UK Equity Income | GB00BF7M7V38 | High risk |
| Man GLG Japan Core Alpha | Japan | GB00B3F46Y30 | High risk |
| Sarasin Global Higher Dividend | Global Equity Income | GB00B84ZSV39 | High risk |
| Schroder European Recovery | Europe Excluding UK | GB0007221889 | High risk |
| Schroder Global Equity Income | Global Equity Income | GB00B76V7M69 | High risk |
| Stewart Investors Indian Subcontinent Sustainability | India/Indian Subcontinent | GB00B1FXTG93 | High risk |
| TB Guinness Global Energy | Commodity/Natural Resources | GB00B56FW078 | 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 |
| ASI UK Smaller Companies | UK Smaller Companies | GB00B7FBH943 | High risk |
| AXA Framlington Global Technology | Technology & Telecommunication | GB00B4W52V57 | High risk |
| Baillie Gifford Diversified Growth | Targeted Absolute Return | GB00BYQCYV62 | Low risk |
| Baillie Gifford Multi Asset Growth | Targeted Absolute Return | GB00BY9C5Y31 | Low risk |
| BMO MM Navigator Distribution | Mixed Investment 20-60% Shares | GB00B23Y3F84 | Low risk |
| BMO North American Equity | North America | GB0030281405 | Medium risk |
| FP Foresight Sustainable Real Estate Securities | Property Other | GB00BMFYBB80 | High risk |
| FP Pictet Multi Asset Portfolio | Targeted Absolute Return | GB00BVYTTC41 | Low risk |
| JPM US Select | North America | GB00B2Q5DW58 | High risk |
| LF Canlife Global Equity Income | Global Equity Income | GB00B5W34S70 | Medium risk |
| Liontrust Global Technology | Technology & Telecommunication | GB00BYXZ5N79 | High risk |
| Morgan Stanley Global Brands | Global | GB0032482498 | Medium risk |
| Quilter Investors Ethical Equity | Global | GB00B0JZPC21 | High risk |
| Royal London Global Sustainable Equity | Global | GB00BL6V0581 | High risk |
| Royal London Sustainable Leaders Trust | UK All Companies | GB00B7V23Z99 | Medium risk |
| Schroder Global Cities Real Estate | Property Other | GB00B1VPTY75 | Medium risk |
| Schroder Managed Wealth Portfolio | Mixed Investment 20-60% Shares | GB00B84YNB54 | Low risk |
| Stewart Investors Worldw. Lead. Sust. | Global | GB0030978729 | Medium risk |
| SVM Continental Europe | Europe Excluding UK | GB0032064411 | High risk |
| SVS Sanlam North American Equity | North America | GB0007655698 | Medium risk |
| VT Chelsea Managed Monthly Income | Mixed Investment 20-60% Shares | GB00BF0NMS52 | 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 11% (8%)
- Alternatives 25% (22%) - includes absolute return strategies & some bond exposure
- UK Corporate Fixed Interest (i.e UK bonds) 0% (0%)
- Emerging Market Fixed Income 0% (0%)
- North American Equities 12% (28%)
- European Equities 11% (7%)
- Chinese Equities 0% (0%)
- Japanese Equities 4% (0%)
- Property 0% (8%)
- UK Equities 19% (12%)
- Gilts 0% (0%)
- Cash 0% (0%)
- Asian / Emerging market equities 0% (4%)
- Other international equities 10% (6%)
- Commodities and Energy 8% (5%)
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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