80-20 Investor Best of the Best Selection - March 2016 Update

A total of 18 funds from February's 29 funds make it into March's selection. Below I list this month's selection in full with the 18 funds that regained their place in black while the new additions are in green.

Just as last time, I have included the full list sorted alphabetically by name and then by risk category.

March'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)

Fund name	Sector	ISIN Code	Risk Level
Artemis - US Extended Alpha	North America	GB00BMMV5G59	High risk
Baillie Gifford - Emerging Markets Bond	Global Emerging Market Bond	GB00B39RMP13	Medium risk
Baillie Gifford - Global Bond	Global Bonds	GB0031761793	Medium risk
CF - Miton Defensive Multi Asset	Mixed Investment 0%-35% Shares	GB00B010Y517	Low risk
F&C - Responsible Sterling Bond	Sterling Corporate Bond	GB00B23YHT07	Low risk
Fidelity - Global Dividend	Global Equity Income	GB00B7FQHJ97	High risk
Fidelity - Global Enhanced Income	Global Equity Income	GB00BD1NLL62	High risk
Fundsmith - Equity	Global	GB00B4LPDJ14	High risk
Henderson - UK Absolute Return	Targeted Absolute Return	GB00B5KKCS68	Low risk
Investec - Global Franchise	Global	GB00B7WN9P32	High risk
Jupiter - Absolute Return	Targeted Absolute Return	GB00B5129B32	Medium risk
Jupiter - Corporate Bond	Sterling Corporate Bond	GB0002691805	Low risk
L&G - Sterling Corporate Bond Index	Sterling Corporate Bond	GB00B4M01C47	Low risk
Legg Mason - IF ClearBridge US Equity Income	North America	GB00B3TTBW75	High risk
Legg Mason - IF Japan Equity	Japan	GB0033507467	High risk
Liontrust - European Growth	Europe Excluding UK	GB00B1GKBD09	Medium risk
Man GLG - Continental European Growth	Europe Excluding UK	GB00B0119370	High risk
McInroy & Wood - Balanced	Mixed Investment 40%-85% Shares	GB00B7RRJ163	Medium risk
Natixis - Loomis Sayles U.S. Equity Leaders	North America	GB00B8L3WZ29	High risk
Schroder - Global Real Estate Securities Income	Property	GB00B4XCGK27	High risk
Standard Life Investments - AAA Income	Sterling Corporate Bond	GB0006161516	Low risk
Standard Life Investments - Emerging Market Debt	Global Emerging Market Bond	GB00B8K56P77	Medium risk
Standard Life Investments - Global Real Estate	Property	GB00B0LD3V96	Medium risk
Threadneedle - Emerging Market Bond	Global Emerging Market Bond	GB0002365608	Medium risk
Threadneedle - Global Bond	Global Bonds	GB0001533685	Medium risk
Threadneedle - UK Social Bond	Sterling Corporate Bond	GB00BF233790	Low risk
Troy Asset Management Ltd - Trojan	Flexible Investment	GB0034243732	Medium risk
Vanguard - LifeStrategy 20% Equity	Mixed Investment 0%-35% Shares	GB00B4NXY349	Low risk
WAY - Global Cautious Portfolio	Mixed Investment 0%-35% Shares	GB00B06G2Q19	Low risk
Wise Investments - Evenlode Income	UK Equity Income	GB00B42KPP53	Medium risk

March's Best of the Best Selection - (grouped by risk)

Here is March's shortlist grouped by their risk category (funds unchanged from last month are in black while new additions are in green):

Fund name	Sector	ISIN Code	Risk Level
Henderson - UK Absolute Return	Targeted Absolute Return	GB00B5KKCS68	Low risk
Vanguard - LifeStrategy 20% Equity	Mixed Investment 0%-35% Shares	GB00B4NXY349	Low risk
WAY - Global Cautious Portfolio	Mixed Investment 0%-35% Shares	GB00B06G2Q19	Low risk
Standard Life Investments - AAA Income	Sterling Corporate Bond	GB0006161516	Low risk
CF - Miton Defensive Multi Asset	Mixed Investment 0%-35% Shares	GB00B010Y517	Low risk
Threadneedle - UK Social Bond	Sterling Corporate Bond	GB00BF233790	Low risk
L&G - Sterling Corporate Bond Index	Sterling Corporate Bond	GB00B4M01C47	Low risk
Jupiter - Corporate Bond	Sterling Corporate Bond	GB0002691805	Low risk
F&C - Responsible Sterling Bond	Sterling Corporate Bond	GB00B23YHT07	Low risk
Jupiter - Absolute Return	Targeted Absolute Return	GB00B5129B32	Medium risk
Baillie Gifford - Global Bond	Global Bonds	GB0031761793	Medium risk
Threadneedle - Global Bond	Global Bonds	GB0001533685	Medium risk
Threadneedle - Emerging Market Bond	Global Emerging Market Bond	GB0002365608	Medium risk
Standard Life Investments - Global Real Estate	Property	GB00B0LD3V96	Medium risk
Standard Life Investments - Emerging Market Debt	Global Emerging Market Bond	GB00B8K56P77	Medium risk
Liontrust - European Growth	Europe Excluding UK	GB00B1GKBD09	Medium risk
Troy Asset Management Ltd - Trojan	Flexible Investment	GB0034243732	Medium risk
Baillie Gifford - Emerging Markets Bond	Global Emerging Market Bond	GB00B39RMP13	Medium risk
McInroy & Wood - Balanced	Mixed Investment 40%-85% Shares	GB00B7RRJ163	Medium risk
Wise Investments - Evenlode Income	UK Equity Income	GB00B42KPP53	Medium risk
Legg Mason - IF Japan Equity	Japan	GB0033507467	High risk
Fundsmith - Equity	Global	GB00B4LPDJ14	High risk
Investec - Global Franchise	Global	GB00B7WN9P32	High risk
Man GLG - Continental European Growth	Europe Excluding UK	GB00B0119370	High risk
Legg Mason - IF ClearBridge US Equity Income	North America	GB00B3TTBW75	High risk
Natixis - Loomis Sayles U.S. Equity Leaders	North America	GB00B8L3WZ29	High risk
Fidelity - Global Enhanced Income	Global Equity Income	GB00BD1NLL62	High risk
Schroder - Global Real Estate Securities Income	Property	GB00B4XCGK27	High risk
Fidelity - Global Dividend	Global Equity Income	GB00B7FQHJ97	High risk
Artemis - US Extended Alpha	North America	GB00BMMV5G59	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 Best of the Best list are listed below. Many of them remain in the Best funds by Sector selection:

Fund name	Sector	ISIN Code	Risk Level
Aviva Inv - European Property	Property	GB00B4KZRT07	Medium risk
AXA - Framlington Japan	Japan	GB0003500179	High risk
BlackRock - European Absolute Alpha	Targeted Absolute Return	GB00B4Y62T40	Low risk
Henderson Inst - Overseas Bond	Global Bonds	GB0007673055	Medium risk
IFSL - Tilney Bestinvest Defensive Portfolio	Mixed Investment 20%-60% Shares	GB00B39VH700	Low risk
L&G - Global Technology Index	Technology & Telecom	GB00B0CNH163	High risk
L&G - UK Property	Property	GB00BK35DS04	Low risk
Liontrust - UK Smaller Companies	UK Smaller Companies	GB0007420788	Medium risk
M&G - Emerging Markets Bond	Global Emerging Market Bond	GB0031958738	Medium risk
Premier - ConBrio Sanford Deland UK Buffettology	UK All Companies	GB00B3QQFJ66	High risk
Royal London - Sustainable Managed Growth Trust	Mixed Investment 0%-35% Shares	GB00B6YBY313	Low risk

Commentary

You will recall that last month the 80-20 Investor portfolio moved into more defensive assets with an increased exposure to property, bonds and cautiously managed funds. There was also a preference for global bonds over UK bonds. The portfolio also had its lowest direct equity exposure ever. Well it turned out to be an insightful move. The chart below shows the performance of the 80-20 Investor selection (green line) versus the FTSE (black line), the average managed fund (red line) and the average cautious managed fund (blue line).

Not only did the 80-20 Investor selection hold up when the market fell over 8% it still finished ahead of the others after a strong equity rally in the second half of February.

Perhaps it is not surprising that the majority of last month's selection make it into this month's shortlist. The asset mix remains broadly the same although there has been a marked reduction in exposure to UK equities. The minimal exposure may bode well especially after me analysis of how the impending UK EU referendum will affect your investments. Despite it being a UK based vote the implications for Europe could be equally as unpredictable, and the portfolio's reduced European equity exposure perhaps reflects that. One of the key influencers of portfolio returns in the coming months will be currency moves as the pound continues to weaken, which is a direct result of the uncertainty surrounding the referendum. Japanese equities are still playing catchup and those funds without hedges are outperforming their hedged peers. The one region where direct equity exposure has increased is the US.

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:

North American Equities 19% (14%)
Global Fixed Interest 18% (19%)
Alternatives 16% (16%)
UK Corporate Fixed Interest (i.e UK bonds) 11% (8%)
European Equities 10% (12%)
Property 8% (11%)
UK Equities 6% (11%)
Japanese Equities 6% (9%)
Other international equities 6% (0%)
Emerging markets 0% (0%)
Cash 0% (0%)

80-20 Investor's outperformance continues even during the market sell-off

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.