80-20 Investor Best of the Best Selection – June 2019 Update

Commentary

As explained in May's monthly newsletter, by the end of May equity investors were left wondering whether the bond market was right all along. Ultimately May will be remembered as the month that Trump escalated the trade war with China and then started a new one with Mexico. This sparked an equity market sell-off (and stocks endured their worst May since 2010). With such a turnaround in fortunes it's perhaps unsurprising that only 11 funds from last month's list of 30 remain the same. Having said that most of those that didn't make it only just missed out and remain in the BFBS tables.

Within the BOTB, bond funds and equity funds containing bond proxies outperformed. The BOTB's cautious equity exposure also aided its outperformance. As a whole the BOTB was down 1.52% versus -1.73% for the average fund in the Mixed Investment 40-85% Shares sector.

From last month's BOTB selection, the best performers during May were Standard Life Investments Emerging Market Debt, Fidelity Global Property and Newton Real Return which made 3.44%, 2.85% and 1.46% respectively. The biggest losers were Emerging market equities and Asian equity funds, with Fidelity China falling 8% which triggered a stop loss alert on the way down.

Unsurprisingly any exposure to Emerging market equities and Chinese equities has been removed from June's BOTB while gilt funds made a return. UK equities continue to receive a boost from the falling pound which explains why there's an increased exposure in this month's BOTB. In fact, the FTSE 100 is one of the best performing major stock market indices over 1 month and 6 month periods. European equity funds have continued to play catchup with their US counterparts and there is now a European equity fund in the BOTB.

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 four and a half 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
Aberdeen Emerging Markets Bond	Global Emerging Markets Bond	GB00B5L9HN22	Medium risk
Aberdeen European Equity	Europe Excluding UK	GB00B0LG6P37	High risk
Aberdeen Property Share	Property Other	GB00B0XWNN66	High risk
Aberdeen Sterling Bond	Global Bonds	GB00BWK27087	Low risk
Aberdeen UK Smaller Companies Equity	UK Smaller Companies	GB00B07T4859	High risk
AXA Sterling Index Linked Bond	UK Index Linked Gilts	GB00B02Y6B22	High risk
BlackRock UK Absolute Alpha	Targeted Absolute Return	GB00B5ZNQ990	Low risk
Fidelity Asian Dividend	Asia Pacific Excluding Japan	GB00B8W5LX86	High risk
Fidelity Global Property	Property Other	GB00B7K2NZ09	High risk
First State Global Listed Infrastructure	Global	GB00B24HJL45	High risk
HSBC UK Gilt Index	UK Gilts	GB00B4581C50	Low risk
Janus Henderson Fixed Interest Monthly Income	Sterling Strategic Bond	GB0001920486	Low risk
Jupiter Strategic Bond	Sterling Strategic Bond	GB00B2RBCS16	Low risk
LF Blue Whale Growth	Global	GB00BD6PG563	High risk
LF Macquarie Global Infrastructure Securities	Global	GB00B1W27X27	Medium risk
Liontrust Sustainable Future Cautious Managed	Mixed Investment 40-85% Shares	GB00BMN90304	Medium risk
Liontrust Sustainable Future Defensive Managed	Mixed Investment 20-60% Shares	GB00BMN90635	Low risk
M&G Global Listed Infrastructure	Global	GB00BF00R928	Medium risk
McInroy & Wood Balanced	Mixed Investment 40-85% Shares	GB00B7RRJ163	Medium risk
MI Chelverton UK Equity Growth	UK All Companies	GB00BP855B75	High risk
Newton International Bond	Global Bonds	GB0006779655	Medium risk
Newton Real Return	Targeted Absolute Return	GB0001642635	Low risk
Royal London UK Government Bond	UK Gilts	GB00B881TW52	Low risk
Slater Growth	UK All Companies	GB00B0706C66	High risk
Standard Life Investments Emerging Market Debt	Global Emerging Markets Bond	GB00B8K56P77	Low risk
Standard Life Investments Global Index Linked Bond	Global Bonds	GB00B7C0H946	Low risk
TB Evenlode Global Income	Global Equity Income	GB00BF1QMV61	Medium risk
Threadneedle Emerging Market Bond	Global Emerging Markets Bond	GB0002365608	Medium risk
VT Seneca Diversified Growth	Mixed Investment 40-85% Shares	GB00B7FPW579	Medium risk
VT Seneca Diversified Income	Mixed Investment 20-60% Shares	GB00B7JTF560	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
Aberdeen Sterling Bond	Global Bonds	GB00BWK27087	Low risk
BlackRock UK Absolute Alpha	Targeted Absolute Return	GB00B5ZNQ990	Low risk
HSBC UK Gilt Index	UK Gilts	GB00B4581C50	Low risk
Janus Henderson Fixed Interest Monthly Income	Sterling Strategic Bond	GB0001920486	Low risk
Jupiter Strategic Bond	Sterling Strategic Bond	GB00B2RBCS16	Low risk
Liontrust Sustainable Future Defensive Managed	Mixed Investment 20-60% Shares	GB00BMN90635	Low risk
Newton Real Return	Targeted Absolute Return	GB0001642635	Low risk
Royal London UK Government Bond	UK Gilts	GB00B881TW52	Low risk
Standard Life Investments Emerging Market Debt	Global Emerging Markets Bond	GB00B8K56P77	Low risk
Standard Life Investments Global Index Linked Bond	Global Bonds	GB00B7C0H946	Low risk
Aberdeen Emerging Markets Bond	Global Emerging Markets Bond	GB00B5L9HN22	Medium risk
LF Macquarie Global Infrastructure Securities	Global	GB00B1W27X27	Medium risk
Liontrust Sustainable Future Cautious Managed	Mixed Investment 40-85% Shares	GB00BMN90304	Medium risk
M&G Global Listed Infrastructure	Global	GB00BF00R928	Medium risk
McInroy & Wood Balanced	Mixed Investment 40-85% Shares	GB00B7RRJ163	Medium risk
Newton International Bond	Global Bonds	GB0006779655	Medium risk
TB Evenlode Global Income	Global Equity Income	GB00BF1QMV61	Medium risk
Threadneedle Emerging Market Bond	Global Emerging Markets Bond	GB0002365608	Medium risk
VT Seneca Diversified Growth	Mixed Investment 40-85% Shares	GB00B7FPW579	Medium risk
VT Seneca Diversified Income	Mixed Investment 20-60% Shares	GB00B7JTF560	Medium risk
Aberdeen European Equity	Europe Excluding UK	GB00B0LG6P37	High risk
Aberdeen Property Share	Property Other	GB00B0XWNN66	High risk
Aberdeen UK Smaller Companies Equity	UK Smaller Companies	GB00B07T4859	High risk
AXA Sterling Index Linked Bond	UK Index Linked Gilts	GB00B02Y6B22	High risk
Fidelity Asian Dividend	Asia Pacific Excluding Japan	GB00B8W5LX86	High risk
Fidelity Global Property	Property Other	GB00B7K2NZ09	High risk
First State Global Listed Infrastructure	Global	GB00B24HJL45	High risk
LF Blue Whale Growth	Global	GB00BD6PG563	High risk
MI Chelverton UK Equity Growth	UK All Companies	GB00BP855B75	High risk
Slater Growth	UK All Companies	GB00B0706C66	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
AXA Framlington Emerging Markets	Global Emerging Markets	GB00B4490M25	High risk
Baillie Gifford Emerging Markets Growth	Global Emerging Markets	GB0006020647	High risk
Baillie Gifford Emerging Markets Leading Companies	Global Emerging Markets	GB00B06HZN29	High risk
Baillie Gifford Global Income Growth	Global Equity Income	GB0005772586	Medium risk
BlackRock Asia	Asia Pacific Excluding Japan	GB00B7VS8S56	High risk
Fidelity Asia	Asia Pacific Excluding Japan	GB00B6Y7NF43	High risk
Fidelity China Consumer	China/Greater China	GB00B82ZSC67	High risk
Fidelity Multi Asset Allocator Defensive	Mixed Investment 0-35% Shares	GB00B8YQD220	Low risk
Fidelity Strategic Bond	Sterling Strategic Bond	GB00B469J896	Low risk
First State Emerging Markets Bond	Global Emerging Markets Bond	GB00B6R3H571	Low risk
First State Greater China Growth	China/Greater China	GB0033874321	High risk
Janus Henderson Inst Global Responsible Managed	Mixed Investment 40-85% Shares	GB0031833402	Medium risk
L&G Multi-Asset Target Return	Targeted Absolute Return	GB00BD97XY71	Medium risk
Margetts Venture Strategy	Flexible Investment	GB00B6VBDR16	Medium risk
Neptune Income	UK Equity Income	GB00B8JCR452	Medium risk
Premier Global Infrastructure Income	Global Equity Income	GB0031637738	High 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
T. Rowe Price Global Technology Equity	Technology & Telecommunications	GB00BD446K01	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 9% (13%)
• Alternatives 22% (20%) - includes absolute return strategies & some bond exposure
• UK Corporate Fixed Interest (i.e UK bonds) 0% (6%)
• Emerging Market Fixed Income 9% (8%)
• North American Equities 10% (9%)*
• European Equities 8% (4%)
• Japanese Equities 0% (0%)
• Property 6% (4%)*
• UK Equities 17% (11%)
• Gilts 12% (0%)
• Cash 4% (0%)
• Emerging market equities 0% (15%)
• Other international equities 0% (4%)
• Asian Equities 3% (6%)

*of the property exposure most is invested in equities of property companies (such as REITs) around the globe. As such they are actually equities and around half of this is based in the US.

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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