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

Commentary

After a tricky November, December proved a strong month for the BOTB as you can clearly see on the chart below which shows the BOTB versus the average sector performance of professionally managed mixed-asset funds with varying equity exposures.

There were also some strong individual fund performances from members of the BOTB as shown below. Two of which, namely Fidelity UK Smaller Companies and Invesco Global Emerging Markets (UK), I bought via my £50k portfolio at the start of December.

Fund	% return in Dec 2020
Barings Eastern Trust	7.12
MI Chelverton UK Equity Growth	7.05
Fidelity UK Smaller Companies	6.19
Invesco Global Emerging Markets (UK)	5.71
ASI Asian Pacific Growth Equity	5.58
Baillie Gifford Global Stewardship	4.81
Threadneedle Global Emerging Market Equity	4.67

 

With the exception of JPM Japan, every fund within the BOTB rose at least 1% during December, a fantastic result, riding the Santa rally into the year-end. Unsurprisingly 19 funds remain the same in this month's BOTB but there are some notable new entrants. Barings Korea Trust enters the high-risk portion of the BOTB. It is a specialist fund that invests as its name suggests. Those who regularly read my newsletters will have seen me mention the Korean KOSPI (which is the main Korean stock exchange) as it has benefited from a strong governmental coronavirus response, a weak dollar and its status as a global tech leader. Elsewhere UK equities are now the largest equity component of the BOTB as the recent vaccine trade and Brexit deal has seen UK equities (particularly small companies stocks) rise in recent months. The increased UK equity exposure comes at the expense of US equities, Japanese equities and emerging market equities. Also, a number of value-focused funds now reside in the BOTB while the overall equity exposure has risen slightly from 61% last month to 63% 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 and Mixed Investment 0-35% Shares.

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 years ago.

Below I list this month's selection in full with the 19 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
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 European	Europe Excluding UK	GB0006058258	Medium risk
Baillie Gifford Global Stewardship	Global	GB00BYNK7G95	High 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
Barings Eastern Trust	Asia Pacific Excluding Japan	GB0000799923	Medium risk
Barings Korea Trust	Specialist	GB0000840719	High risk
BNY Mellon Real Return	Targeted Absolute Return	GB0001642635	Low risk
Close Select Fixed Income	Sterling Strategic Bond	GB00BD6R7Y87	Low risk
Fidelity China Consumer	China/Greater China	GB00B82ZSC67	Medium risk
Fidelity Multi Asset Open Defensive	Mixed Investment 0-35% Shares	GB00BC7GXK56	Low risk
Fidelity UK Smaller Companies	UK Smaller Companies	GB00B7VNMB18	High 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 Defensive Multi Asset	Mixed Investment 0-35% Shares	GB00B0525B66	Low risk
LF Miton UK Smaller Companies	UK Smaller Companies	GB00B818N094	High risk
LF Miton UK Value Opportunities	UK All Companies	GB00B8KV0M06	High 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
Royal London Corporate Bond	Sterling Corporate Bond	GB00B87FJ401	Low risk
Royal London Sustainable Managed Growth Trust	Mixed Investment 0-35% Shares	GB00B8H7XS88	Low risk
Schroder UK Dynamic Absolute Return	Targeted Absolute Return	GB00B3N74T57	Low risk
T. Rowe Price Global Focused Growth Equity	Global	GB00BD446774	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
7IM Moderately Cautious	Mixed Investment 0-35% Shares	GB0033953497	Low risk
ASI Strategic Bond	Sterling Strategic Bond	GB00BWK27X12	Low risk
BNY Mellon Real Return	Targeted Absolute Return	GB0001642635	Low risk
Close Select Fixed Income	Sterling Strategic Bond	GB00BD6R7Y87	Low risk
Fidelity Multi Asset Open Defensive	Mixed Investment 0-35% Shares	GB00BC7GXK56	Low risk
LF Miton Defensive Multi Asset	Mixed Investment 0-35% Shares	GB00B0525B66	Low risk
Rathbone Ethical Bond Fund	Sterling Corporate Bond	GB0030957137	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
Schroder UK Dynamic Absolute Return	Targeted Absolute Return	GB00B3N74T57	Low risk
Allianz Total Return Asian Equity	Asia Pacific Excluding Japan	GB00B1FRQV53	Medium risk
Baillie Gifford European	Europe Excluding UK	GB0006058258	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
MI Chelverton UK Equity Growth	UK All Companies	GB00BP855B75	Medium risk
Premier Diversified Growth	Mixed Investment 40-85% Shares	GB00B8BJV423	Medium risk
T. Rowe Price Global Focused Growth Equity	Global	GB00BD446774	Medium risk
VT Gravis Clean Energy Income	Global	GB00BFN4H792	Medium risk
Baillie Gifford Global Stewardship	Global	GB00BYNK7G95	High 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 Korea Trust	Specialist	GB0000840719	High risk
Fidelity UK Smaller Companies	UK Smaller Companies	GB00B7VNMB18	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

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 Asian Pacific Growth Equity	Asia Pacific Excluding Japan	GB00B7MZSJ60	Medium risk
Baillie Gifford Global Income Growth	Global Equity Income	GB0005772586	Medium risk
Fidelity Global High Yield	Sterling High Yield	GB00B7K7SQ18	Medium risk
JPM Japan	Japan	GB00B1XMTP77	Medium risk
JPM Multi Asset Income	Mixed Investment 20-60% Shares	GB00B4N1ZJ15	Low risk
Jupiter Corporate Bond	Sterling Corporate Bond	GB0002691805	Low risk
Liontrust Global Alpha	Flexible Investment	GB0031190555	Medium risk
Merian Monthly Income Bond	Sterling Strategic Bond	GB00B1XG8187	Low risk
Morgan Stanley Sterling Corporate Bond	Sterling Corporate Bond	GB0004757497	Low risk
Threadneedle Dynamic Real Return	Targeted Absolute Return	GB00B93TQ868	Low risk
Threadneedle Global Emerging Market Equity	Global Emerging Markets	GB00B10SJD63	High 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% (21%)
• Alternatives 13% (9%) - includes absolute return strategies & some bond exposure
• UK Corporate Fixed Interest (i.e UK bonds) 7% (6%)
• Emerging Market Fixed Income 0% (0%)
• North American Equities 11% (13%)
• European Equities 8% (8%)
• Chinese Equities 7% (7%)
• Japanese Equities 0% (4%)
• Property 0% (0%)
• UK Equities 20% (9%)
• Gilts 0% (0%)
• Cash 3% (3%)
• Emerging market equities 3% (6%)
• Other international equities 0% (0%)
• Asian Equities 14% (14%)
• Commodities and Energy 0% (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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