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

Commentary

December was a strong month for equity markets as the Santa rally got into full swing in the UK and the US after the risks surrounding the UK general election and the US-China trade war dissipated. This followed hot on the heels of an already strong November.

December's BOTB had some stand out performances as shown in the table below with the Fidelity UK Smaller Companies fund (a fund that also made the recent Winter Fund Portfolio) making an eye-watering 8.2%.

Fund	Performance 3rd Dec 2019 to 2nd Jan 2020
Fidelity UK Smaller Companies	8.2%
ASI UK Real Estate Share	6.66%
Fidelity Enhanced Income	5.81%
Close FTSE techMARK	5.23%
Baillie Gifford Positive Change	5.16%

In fact during the period only three funds within December's BOTB did not make a profit (all of which invested in Japanese equities), while the remaining funds made an average return of 3.15%, which is quite incredible.

It's, therefore, unsurprising that 16 of the funds from December's BOTB retain their position in January's BOTB.

January's BOTB maintains its reduced unhedged US equity exposure despite US equities hitting new all-time highs in dollar terms. Again, this is reflective of a wider trend of reducing the BOTB's currency exposure across its overseas holdings, while at the same time increasing the BOTB's domestic equity exposure. In fact the UK equity exposure has increased considerably to 25% of assets and most of that is via smaller companies funds. This is reflective of the strong performance in the lead-up to and after the general election.

Other than that the asset mix of the BOTB has remained fairly consistent (the equity content of the BOTB is almost unchanged at 63%), although there is now a small exposure to Asian equities which reflects the improved sentiment surrounding global trade and economic growth. 

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 16 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.

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)

Name	Sector	ISIN Code	Risk
Artemis UK Smaller Companies	UK Smaller Companies	GB00B2PLJL57	High risk
ASI European Real Estate Share	Property Other	GB00BWK26907	High risk
ASI UK Real Estate Share	Property Other	GB00B0XWNN66	High risk
Baillie Gifford Pacific	Asia Pacific Excluding Japan	GB0006063233	High 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
First State Japan Focus	Japan	GB00BWNGX432	High risk
Invesco High Yield (UK)	Sterling High Yield	GB00B3RW7649	Low risk
JPM UK Smaller Companies	UK Smaller Companies	GB0030880255	High risk
Jupiter Japan Income	Japan	GB00B0HZTZ55	Medium risk
Kames Ethical Cautious Managed	Mixed Investment 20-60% Shares	GB00B1N9DX45	Low risk
Liontrust European Enhanced Income	Europe Excluding UK	GB00BD2WZ873	Medium risk
Liontrust Sustainable Future Corporate Bond	Sterling Corporate Bond	GB0030029069	Low risk
Margetts Sentinel Income Portfolio	Mixed Investment 20-60% Shares	GB00BZ0P5485	Low risk
Merian Monthly Income Bond	Sterling Strategic Bond	GB00B1XG8187	Low risk
MI Downing Monthly Income	UK Equity Income	GB00B61JRG28	Medium risk
Premier Diversified Growth	Mixed Investment 40-85% Shares	GB00B8BJV423	Medium 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
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	High risk
Schroder Global Healthcare	Global	GB00B76V7Q08	High risk
Schroder Sterling Corporate Bond	Sterling Corporate Bond	GB0009379370	Low risk
Schroder UK Dynamic Absolute Return	Targeted Absolute Return	GB00B3N74T57	Low risk
Slater Growth	UK All Companies	GB00B0706C66	Medium risk
VT Gravis Clean Energy Income	Global	GB00BFN4H792	Medium 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):

Name	Sector	ISIN Code	Risk
Fidelity Moneybuilder Balanced	Mixed Investment 40-85% Shares	GB00B7XJFX07	Low risk
Invesco High Yield (UK)	Sterling High Yield	GB00B3RW7649	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
Margetts Sentinel Income Portfolio	Mixed Investment 20-60% Shares	GB00BZ0P5485	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 UK Dynamic Absolute Return	Targeted Absolute Return	GB00B3N74T57	Low risk
Barings Strategic Bond	Global Bonds	GB0000831759	Medium risk
Jupiter Japan Income	Japan	GB00B0HZTZ55	Medium risk
Liontrust European Enhanced Income	Europe Excluding UK	GB00BD2WZ873	Medium risk
MI Downing Monthly Income	UK Equity Income	GB00B61JRG28	Medium risk
Premier Diversified Growth	Mixed Investment 40-85% Shares	GB00B8BJV423	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
Slater Growth	UK All Companies	GB00B0706C66	Medium risk
VT Gravis Clean Energy Income	Global	GB00BFN4H792	Medium risk
Artemis UK Smaller Companies	UK Smaller Companies	GB00B2PLJL57	High risk
ASI European Real Estate Share	Property Other	GB00BWK26907	High risk
ASI UK Real Estate Share	Property Other	GB00B0XWNN66	High risk
Baillie Gifford Pacific	Asia Pacific Excluding Japan	GB0006063233	High risk
Baillie Gifford Positive Change	Global	GB00BYVGKV59	High risk
Close FTSE techMARK	Technology & Telecommunications	GB00B87JKQ15	High risk
First State Japan Focus	Japan	GB00BWNGX432	High risk
JPM UK Smaller Companies	UK Smaller Companies	GB0030880255	High risk
Sarasin Thematic Global Equity (Sterling Hedged)	Global	GB00B83F3755	High risk
Schroder Global Healthcare	Global	GB00B76V7Q08	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
ASI Corporate Bond	Sterling Corporate Bond	GB00BWK26G71	Low risk
ASI Japanese Equity	Japan	GB0004521737	Medium risk
Barclays Europe (ex-UK) Alpha	Europe Excluding UK	GB00B72WQ825	High risk
BlackRock Continental European	Europe Excluding UK	GB00B4VY9893	High risk
BNY Mellon Global Absolute Return	Targeted Absolute Return	GB00B86R4N19	Low risk
Fidelity Enhanced Income	UK Equity Income	GB00B87HPZ94	Medium risk
Fidelity UK Smaller Companies	UK Smaller Companies	GB00B7VNMB18	High risk
First State Diversified Growth	Flexible Investment	GB00BVXC2S15	Medium risk
Marlborough US Multi-Cap Income	North America	GB0001722882	High risk
Merian Corporate Bond	Sterling Corporate Bond	GB00B1XG7X39	Low risk
Royal London Sustainable Leaders Trust	UK All Companies	GB00B7V23Z99	Medium risk
Royal London Sustainable Managed Growth Trust	Mixed Investment 0-35% Shares	GB00B8H7XS88	Low risk
Royal London Sustainable World Trust	Mixed Investment 40-85% Shares	GB00B882H241	Medium risk
Thesis Climate Assets	Mixed Investment 40-85% Shares	GB00B3K3HX15	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% (17%)
• Alternatives 11% (10%) - includes absolute return strategies & some bond exposure
• UK Corporate Fixed Interest (i.e UK bonds) 4% (7%)
• Emerging Market Fixed Income 0% (0%)
• North American Equities 6% (7%)
• European Equities 9% (11%)
• Japanese Equities 7% (11%)
• Property 7% (4%)
• UK Equities 25% (19%)
• Gilts 0% (0%)
• Cash 5% (4%)
• Emerging market equities 0% (0%)
• Other international equities 3% (6%)
• Asian Equities 3% (0%)
• Commodities and Energy 3% (4%)

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 HUGELY outperformed the average managed fund and the market.

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