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.
All performance figures are net of fund charges. The material in any email, the MoneytotheMasses.com website, associated pages / channels / accounts and any other correspondence are for general information only and do not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation. See full Terms & Conditions, Privacy Policy and Disclaimer.
Neither MoneytotheMasses.com or 80-20 Investor nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.
Funds invest in shares, bonds, and other financial instruments and are by their nature speculative and can be volatile. You should never invest more than you can safely afford to lose. The value of your investment can go down as well as up so you may get back less than you originally invested. Tax rules can change and benefits depend on individual circumstances.
Information provided by MoneytotheMasses.com or 80-20 Investor is for general information only and not intended to be relied upon by readers in making (or not making) specific investment decisions.
Appropriate independent advice should be obtained before making any such decisions. Leadenhall Learning (owner of MoneytotheMasses.com or 80-20 Investor) and its staff do not accept liability for any loss suffered by readers as a result of any such decisions.
The tables and graphs are derived from data supplied by Trustnet. All Rights Reserved.
