Commentary
Eleven funds from last month's 30 Best of the Best (BOTB) Selection regained their position in this month's shortlist. Most of those that didn't remain in their respective Best Funds by Sector (BFBS) lists. As mentioned in June's monthly newsletter, May was a great month to be an investor. That's not to say the month didn't pass without incident, the eruption of Trumpgate perhaps the biggest blip. However investors continue to buy-the-dips for now and it drove equity markets to numerous all-time highs.
While some of the funds within the BOTB have changed, the overall asset mix remains broadly the same (see bottom of the article). Global funds have gained favour over direct US equity funds, although the former are still predominantly US focused. The strengthening euro vs sterling as well as diminished political risks in Europe have helped cement a number of European equity funds. Marlborough European Multi-Cap is a case in point and is the most consistent member of the BOTB in the last year. It is interesting and perhaps unsurprising that European equities have mostly dropped into the medium risk category, while US equities have tended to move in the opposite direction. You can see this on this month's growth heatmap. I expect the latter move reflects the hidden nervousness in US markets I highlighted in my recent market commentary.
The hedged funds that made an appearance in last month's BOTB have fallen out as, with the exception of the euro, sterling's value flatlined against most currencies during the month. It will be interesting to see how currency markets react to the UK general election next week. The BOTB's direct UK equity exposure remains largely via smaller companies funds and the sector had a strong month again during May (see the aforementioned heatmap). Managed funds once again are prevalent which reflects the fact that bond markets haven't collapsed so far this year as many had anticipated. As I said in last month's comments, yes the returns have been largely unexciting but they have been positive and fairly consistent.
Japanese equities remain a notable omission while emerging markets and Chinese equities are included, for the latter it's the first time since January/February. The overall message from this month's BOTB is 'diversification'. If you glance through the list of funds a range of sectors are included as well as a number of diversified funds (global and managed funds). In terms of direct equity exposure the portfolio's exposure is slightly down on last month and sits at around 65%. At the foot of this article you can see how the 80-20 Investor Portfolio has continued to outperform the professional fund managers as well as the market since its launch almost three years ago.
Below I list this month's selection in full with the 11 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.
June'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 Level |
| Artemis - European Opportunities | Europe Excluding UK | GB00B6WFCR53 | High risk |
| Artemis - High Income | Sterling Strategic Bond | GB00B2PLJN71 | Low risk |
| AXA - Framlington Global Technology | Technology & Telecommunication | GB00B4W52V57 | High risk |
| AXA - Framlington Managed Income | Sterling Strategic Bond | GB00B6RPX228 | Low risk |
| Baillie Gifford - American | North America | GB0006061963 | Medium risk |
| Baillie Gifford - Corporate Bond | Sterling Strategic Bond | GB0005947741 | Low risk |
| Baillie Gifford - Emerging Markets Leading Companies | Global Emerging Markets | GB00B06HZN29 | High risk |
| Baillie Gifford - European | Europe Excluding UK | GB0006058258 | Medium risk |
| Baillie Gifford - Global Income Growth | Global Equity Income | GB0005772586 | Medium risk |
| Baillie Gifford - Greater China | China/Greater China | GB00B39RMM81 | High risk |
| Baillie Gifford - Managed | Mixed Investment 40-85% Shares | GB0006010168 | Low risk |
| Baillie Gifford - Pacific | Asia Pacific Excluding Japan | GB0006063233 | High risk |
| Barclays - High Income Portfolio | Mixed Investment 0-35% Shares | GB00B68F5S16 | Low risk |
| F&C - Property Growth and Income | Property | GB00BQWJ8687 | Low risk |
| FP - Octopus UK Micro Cap Growth | UK Smaller Companies | GB00BYQ7HN43 | High risk |
| Fundsmith - Equity | Global | GB00B4Q5X527 | Medium risk |
| Henderson - European Absolute Return | Targeted Absolute Return | GB00B3CPX151 | Low risk |
| Henderson - Global Technology | Technology & Telecommunication | GB0007698847 | High risk |
| L&G - High Income Trust | Sterling High Yield | GB00B0CNHJ41 | Low risk |
| Legg Mason - IF ClearBridge Global Equity Income | Global Equity Income | GB00B2R8FL62 | Medium risk |
| Marlborough - European Multi-Cap | Europe Excluding UK | GB0001719730 | Medium risk |
| MI - Chelverton UK Equity Growth | UK All Companies | GB00BP855B75 | High risk |
| Old Mutual - UK Smaller Companies | UK Smaller Companies | GB00B1XG8B83 | High risk |
| S&W - Saltus Wealth | Targeted Absolute Return | GB00B6RLZP73 | Low risk |
| Schroder - High Yield Opportunities | Sterling High Yield | GB00B83RDY83 | Low risk |
| Standard Life Investments - Global Smaller Companies | Global | GB00B7KVX245 | Medium risk |
| TM - Cavendish Technology | Technology & Telecommunication | GB00B60SMN24 | High risk |
| Unicorn - Mastertrust | Flexible Investment | GB0031269367 | Medium risk |
| Wise Investments - TB Wise Income | Flexible Investment | GB00B0LJ0160 | Medium risk |
| Wise Investments - TB Wise Investment | Flexible Investment | GB0034272533 | Medium risk |
June's Best of the Best Selection - (grouped by risk)
Here is June'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 Level |
| Artemis - High Income | Sterling Strategic Bond | GB00B2PLJN71 | Low risk |
| AXA - Framlington Managed Income | Sterling Strategic Bond | GB00B6RPX228 | Low risk |
| Baillie Gifford - Corporate Bond | Sterling Strategic Bond | GB0005947741 | Low risk |
| Baillie Gifford - Managed | Mixed Investment 40-85% Shares | GB0006010168 | Low risk |
| Barclays - High Income Portfolio | Mixed Investment 0-35% Shares | GB00B68F5S16 | Low risk |
| F&C - Property Growth and Income | Property | GB00BQWJ8687 | Low risk |
| Henderson - European Absolute Return | Targeted Absolute Return | GB00B3CPX151 | Low risk |
| L&G - High Income Trust | Sterling High Yield | GB00B0CNHJ41 | Low risk |
| S&W - Saltus Wealth | Targeted Absolute Return | GB00B6RLZP73 | Low risk |
| Schroder - High Yield Opportunities | Sterling High Yield | GB00B83RDY83 | Low risk |
| Baillie Gifford - American | North America | GB0006061963 | Medium risk |
| Baillie Gifford - European | Europe Excluding UK | GB0006058258 | Medium risk |
| Baillie Gifford - Global Income Growth | Global Equity Income | GB0005772586 | Medium risk |
| Fundsmith - Equity | Global | GB00B4Q5X527 | Medium risk |
| Legg Mason - IF ClearBridge Global Equity Income | Global Equity Income | GB00B2R8FL62 | Medium risk |
| Marlborough - European Multi-Cap | Europe Excluding UK | GB0001719730 | Medium risk |
| Standard Life Investments - Global Smaller Companies | Global | GB00B7KVX245 | Medium risk |
| Unicorn - Mastertrust | Flexible Investment | GB0031269367 | Medium risk |
| Wise Investments - TB Wise Income | Flexible Investment | GB00B0LJ0160 | Medium risk |
| Wise Investments - TB Wise Investment | Flexible Investment | GB0034272533 | Medium risk |
| Artemis - European Opportunities | Europe Excluding UK | GB00B6WFCR53 | High risk |
| AXA - Framlington Global Technology | Technology & Telecommunication | GB00B4W52V57 | High risk |
| Baillie Gifford - Emerging Markets Leading Companies | Global Emerging Markets | GB00B06HZN29 | High risk |
| Baillie Gifford - Greater China | China/Greater China | GB00B39RMM81 | High risk |
| Baillie Gifford - Pacific | Asia Pacific Excluding Japan | GB0006063233 | High risk |
| FP - Octopus UK Micro Cap Growth | UK Smaller Companies | GB00BYQ7HN43 | High risk |
| Henderson - Global Technology | Technology & Telecommunication | GB0007698847 | High risk |
| MI - Chelverton UK Equity Growth | UK All Companies | GB00BP855B75 | High risk |
| Old Mutual - UK Smaller Companies | UK Smaller Companies | GB00B1XG8B83 | High risk |
| TM - Cavendish Technology | Technology & Telecommunication | GB00B60SMN24 | 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 Level |
| Artemis - Pan-European Absolute Return | Targeted Absolute Return | GB00BMMV4J16 | Medium risk |
| AXA - Global High Income | Sterling High Yield | GB00B0T9V375 | Low risk |
| Barclays - Income Plus Portfolio | Mixed Investment 0%-35% Shares | GB00B6WYG696 | Low risk |
| Baring - European Growth | Europe Excluding UK | GB0000804335 | Medium risk |
| BlackRock - Asia Special Situations | Asia Pacific Excluding Japan | GB00BJGZZ065 | High risk |
| BlackRock - US Dynamic | North America | GB00B87XJQ69 | Medium risk |
| Cavendish - Opportunities | UK All Companies | GB0032212283 | Medium risk |
| EdenTree - Amity European | Europe Excluding UK | GB0008448333 | High risk |
| FP - Apollo Multi Asset Cautious | Mixed Investment 20%-60% Shares | GB00B3FPDY55 | Low risk |
| Premier - Diversified | Mixed Investment 40%-85% Shares | GB00B8BJV423 | Low risk |
| Sarasin - Fund of Funds - Global Equity | Flexible Investment | GB00B7YYSB32 | Medium risk |
| Sarasin - Global Higher Dividend (Sterling Hedged) | Global Equity Income | GB00B80S2X69 | Medium risk |
| Sarasin - Thematic Global Equity (Sterling Hedged) | Global | GB00B83F3755 | Medium risk |
| Schroder - UK Dynamic Smaller Companies | UK Smaller Companies | GB0007220360 | High risk |
| Templeton - Global Total Return Bond | Global Bonds | GB00BKT0HX25 | Low risk |
| Threadneedle - UK Smaller Companies | UK Smaller Companies | GB0001530343 | High risk |
| TwentyFour - Dynamic Bond | Sterling Strategic Bond | GB00B5KPRZ34 | Low risk |
| UBS - US Equity | North America | GB00B7V68L26 | High risk |
| Unicorn - UK Smaller Companies | UK Smaller Companies | GB0031785065 | 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 13% (13%)
- Alternatives 17% (16%) - includes absolute return strategies & property
- UK Corporate Fixed Interest (i.e UK bonds) 3% (0%)
- Emerging Market Fixed Interest 0% (0%)
- North American Equities 15% (18%)
- European Equities 13% (12%)
- Japanese Equities 0% (0%)
- Property 0% (0%)
- UK Equities 17% (19%)
- Cash 5% (5%)
- Asian equities 3% (0%)
- Asia Pacific Emerging equities 7% (3%)
- Other international equities 7% (14%)
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 the FTSE 100 (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. The large spike in performance in the 80-20 Investor portfolio on the right hand side of the chart is where the portfolio rallied after the Brexit referendum while global markets plummeted.
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