A total of 13 funds from December's 29 funds make it into January's selection. Below I list this month's selection in full with the 13 funds that regained their place in black while the new additions are in green.
Just as last time, I have included the full list sorted alphabetically by name and then by risk category.
January'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)
| Fund Name | Sector | ISIN Code | Risk Level |
| Artemis - Pan-European Absolute Return | Targeted Absolute Return | GB00BMMV4J16 | Low risk |
| Artemis - US Extended Alpha | North America | GB00BMMV5G59 | High risk |
| Artemis - US Select | North America | GB00BMMV5105 | High risk |
| AXA - Framlington UK Smaller Cos | UK Smaller Companies | GB0030310857 | Medium risk |
| Baillie Gifford - American | North America | GB0006061740 | High risk |
| BlackRock - European Absolute Alpha | Targeted Absolute Return | GB00B4Y62T40 | Low risk |
| Fidelity - Global Enhanced Income | Global Equity Income | GB00BD1NLL62 | High risk |
| Henderson - Fixed Interest Monthly Income | Sterling Strategic Bond | GB00B7GSYN71 | Low risk |
| Henderson Inst - Overseas Bond | Global Bonds | GB0007673055 | Medium risk |
| HSBC - Open Global Property | Property | GB00B84L7Q94 | Medium risk |
| Investec - Global Franchise | Global | GB00B7WN9P32 | High risk |
| Investec - Monthly High Income | Sterling High Yield | GB0031141681 | Low risk |
| Jupiter - European | Europe Excluding UK | GB0006664683 | High risk |
| L&G - Emerging Markets Government Bond (US$) Index | Global Emerging Market Bond | GB00B7MJV331 | Medium risk |
| L&G - Global Technology Index | Technology & Telecom | GB00B0CNH163 | High risk |
| Legg Mason - IF Japan Equity | Japan | GB0033507467 | High risk |
| Liontrust - European Growth | Europe Excluding UK | GB00B1GKBD09 | Medium risk |
| Liontrust - UK Smaller Companies | UK Smaller Companies | GB0007420788 | Medium risk |
| Man GLG - Continental European Growth | Europe Excluding UK | GB00B0119370 | Medium risk |
| Natixis - Loomis Sayles U.S. Equity Leaders | North America | GB00B8L3WZ29 | High risk |
| Premier - ConBrio Sanford Deland UK Buffettology | UK All Companies | GB00B3QQFJ66 | Medium risk |
| Schroder - Monthly High Income | Sterling High Yield | GB0009505693 | Low risk |
| Standard Life Investments - Global Equity Unconstrained | Global | GB0004483540 | High risk |
| Standard Life Investments - Higher Income | Sterling High Yield | GB0000938844 | Low risk |
| Standard Life Investments - UK Equity Income Unconstrained | UK Equity Income | GB00B1LBSR16 | Medium risk |
| Threadneedle - Global Bond | Global Bonds | GB0001533685 | Medium risk |
| Vanguard - LifeStrategy 20% Equity | Mixed Investment 0%-35% Shares | GB00B4NXY349 | Low risk |
January's Best of the Best Selection - (grouped by risk)
Here is January's shortlist grouped by their risk category (funds unchanged from last month are in black while new additions are in green):
| Fund Name | Sector | ISIN Code | Risk Level |
| Artemis - Pan-European Absolute Return | Targeted Absolute Return | GB00BMMV4J16 | Low risk |
| BlackRock - European Absolute Alpha | Targeted Absolute Return | GB00B4Y62T40 | Low risk |
| Henderson - Fixed Interest Monthly Income | Sterling Strategic Bond | GB00B7GSYN71 | Low risk |
| Vanguard - LifeStrategy 20% Equity | Mixed Investment 0%-35% Shares | GB00B4NXY349 | Low risk |
| Schroder - Monthly High Income | Sterling High Yield | GB0009505693 | Low risk |
| Standard Life Investments - Higher Income | Sterling High Yield | GB0000938844 | Low risk |
| Investec - Monthly High Income | Sterling High Yield | GB0031141681 | Low risk |
| Man GLG - Continental European Growth | Europe Excluding UK | GB00B0119370 | Medium risk |
| Premier - ConBrio Sanford Deland UK Buffettology | UK All Companies | GB00B3QQFJ66 | Medium risk |
| Liontrust - UK Smaller Companies | UK Smaller Companies | GB0007420788 | Medium risk |
| Liontrust - European Growth | Europe Excluding UK | GB00B1GKBD09 | Medium risk |
| AXA - Framlington UK Smaller Cos | UK Smaller Companies | GB0030310857 | Medium risk |
| Henderson Inst - Overseas Bond | Global Bonds | GB0007673055 | Medium risk |
| HSBC - Open Global Property | Property | GB00B84L7Q94 | Medium risk |
| L&G - Emerging Markets Government Bond (US$) Index | Global Emerging Market Bond | GB00B7MJV331 | Medium risk |
| Threadneedle - Global Bond | Global Bonds | GB0001533685 | Medium risk |
| Standard Life Investments - UK Equity Income Unconstrained | UK Equity Income | GB00B1LBSR16 | Medium risk |
| Legg Mason - IF Japan Equity | Japan | GB0033507467 | High risk |
| Natixis - Loomis Sayles U.S. Equity Leaders | North America | GB00B8L3WZ29 | High risk |
| Artemis - US Extended Alpha | North America | GB00BMMV5G59 | High risk |
| Baillie Gifford - American | North America | GB0006061740 | High risk |
| Investec - Global Franchise | Global | GB00B7WN9P32 | High risk |
| Jupiter - European | Europe Excluding UK | GB0006664683 | High risk |
| Fidelity - Global Enhanced Income | Global Equity Income | GB00BD1NLL62 | High risk |
| Artemis - US Select | North America | GB00BMMV5105 | High risk |
| Standard Life Investments - Global Equity Unconstrained | Global | GB0004483540 | High risk |
| L&G - Global Technology Index | Technology & Telecom | GB00B0CNH163 | 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 Best of the Best list are listed below. Many of them remain in the Best funds by Sector selection:
| Fund Name | Sector | ISIN Code | Risk Level |
| Aberdeen - European High Yield Bond | Sterling High Yield | GB00B5968F40 | Low risk |
| Aviva Inv - Asia Pacific Property | Property | GB00B2RJM074 | Medium risk |
| AXA - Framlington Japan | Japan | GB0003500179 | High risk |
| BlackRock - Corporate Bond | Sterling Corporate Bond | GB0005769541 | Low risk |
| CF - Miton UK Multi Cap Income | UK Equity Income | GB00B3SRD718 | Medium risk |
| FP - Miton Undervalued Assets | UK All Companies | GB00B3BSKG91 | Medium risk |
| Fundsmith - Equity | Global | GB00B4LPDJ14 | High risk |
| Invesco Perpetual - Global Bond | Global Bonds | GB0033028662 | Medium risk |
| JPM - Japan | Japan | GB0030879471 | High risk |
| L&G - UK Property | Property | GB00BK35DS04 | Low risk |
| Marlborough - High Yield Fixed Interest | Sterling High Yield | GB00B03TN153 | Low risk |
| MFM - Slater Recovery | UK All Companies | GB0031554248 | Medium risk |
| Rathbone - Global Opportunities | Global | GB0030349095 | High risk |
| Schroder - Strategic Credit | Sterling Strategic Bond | GB00B11DNZ00 | Low risk |
| Threadneedle - American Extended Alpha | North America | GB00B28B7B81 | High risk |
| Threadneedle - UK Smaller Companies | UK Smaller Companies | GB0001530343 | Medium risk |
Commentary
Last month the 80-20 Investor Best of the Best Selection performed incredibly well during a month when most equity markets lost money. The total return from the FTSE 100 was -2.32%, so much for the Santa Rally. However the 80-20 Investor Best of the Best Selection returned 1.13% meaning that it outperformed 99.1% of professional fund managers running managed portfolios.
Unsurprisingly this January's 80-20 Investor Best of the Best Selection looks to build on this by leaving the asset mix (see below) relatively unchanged, albeit with an increased European equity exposure at the expense of Japanese equities. In addition the selection continues to expand the range of assets it is investing in including, for the first time in months, a tiny exposure to emerging markets. This is a bold call and it will be interesting to see how it plays out.
The preference for global bonds over UK bonds continues, allowing the portfolio to benefit from moves in both bond prices and currencies. Finally, there are a number of index trackers in this month's Best of the Best Selection, which emphasises the fact that the algorithm doesn't discriminate against active funds (which are funds run by a manager) and passive funds (run by computers). The 80-20 Investor algorithm invests in whatever is working and so sidesteps the nonsensical passive vs active fund debate that takes up far too many newspaper column inches.
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:
- UK Equities 18% (22%)
- North American Equities 19% (21%)
- Global Fixed Interest 22% (19%)
- Japanese Equities 6% (11%)
- European Equities 15% (7%)
- Property 4% (7%)
- UK Corporate Fixed Interest (i.e UK bonds) 6% (6%)
- Emerging markets 4% (0%)
- Alternatives 3% (4%)
- Cash 0% (3%)
The remainder is made up of other international equities.
80-20 Investor's outperformance continues even during the market sell-off
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 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 balanced managed fund (red line) and the average managed fund with up to 85% equity exposure (blue 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 (currently it has an 60-65% exposure to equities). 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.
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