80-20 Investor Best of the Best Selection – March 2020 Update

Commentary

As you will have read in March’s newsletter, February 2020 will be talked about for years to come. Markets finally capitulated, with COVID-19 being the catalyst for a long-overdue correction. In such an environment all ships sink at once.

The only funds to make money were those invested in high-quality bonds (such as those issued by governments). Of the 2145 funds available to investors, which invest in a range of assets, 92% of them lost money in February. It’s a pattern reflected in February’s BOTB where only 10% of the funds made a profit. The three funds that did were Vanguard UK Long Duration Gilt Index (up 2.2%), ASI Sterling Bond (up 1.08%) and Schroder Strategic Bond (up 0.07%). At the other end of the spectrum, was Slater Growth which fell over 10%, a by-product of a month where the FTSE 100 fell 9%.

As a whole, the average return of February’s BOTB was -4.80%, which compares to a -4.68% average return by funds in the Mixed Investment 40-85% Shares.

15 of the funds from February’s BOTB retain their place in this month's BOTB. Interestingly there is now a small Asian equity exposure, a reflection of how Chinese equities have in fact just hit a two year high, recovering their COVID-19 losses. There is an increased presence of Property shares (REITS) along with funds with exposure to utilities, both sectors that have outperformed during the recent sell-off. This month’s BOTB has a reduced equity exposure (down to 52%) in favour of bonds (including emerging market bonds), a sign that the brakes are being applied. In terms of equity exposure, the UK and European exposures have reduced in favour of US equities.

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 over five years ago.

Below I list this month's selection in full with the 15 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.

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)

Name	Sector	ISIN Code	Risk
ASI European Real Estate Share	Property Other	GB00BWK26907	Medium risk
ASI Strategic Bond	Sterling Strategic Bond	GB00BWK27Z36	Low risk
ASI UK Real Estate Share	Property Other	GB00B0XWNN66	High risk
AXA Framlington Biotech	Specialist	GB0031007254	High risk
Baillie Gifford Positive Change	Global	GB00BYVGKV59	High risk
Close Select Fixed Income	Sterling Strategic Bond	GB00BD6R7Y87	Low risk
First State Diversified Growth	Flexible Investment	GB00BVXC2S15	Medium risk
First State Emerging Markets Bond	Global EM Bonds - Hard Currency	GB00B6R3H571	Low risk
GAM Credit Opportunities GBP	Sterling Strategic Bond	GB00BYQJ5G92	Low risk
Invesco High Yield (UK)	Sterling High Yield	GB00B3RW7649	Low risk
JPM UK Smaller Companies	UK Smaller Companies	GB0030880255	High risk
Kames Ethical Cautious Managed	Mixed Investment 20-60% Shares	GB00B1N9DX45	Medium risk
LF Canlife Asia Pacific	Asia Pacific Excluding Japan	GB00B719QW87	High risk
LF Gresham House UK Multi Cap Income	UK Equity Income	GB00BYXVGS75	High risk
LF Miton Global Infrastructure Income	Global Equity Income	GB00BD3H9L21	Medium risk
Liontrust Sustainable Future Corporate Bond	Sterling Corporate Bond	GB0030029069	Low risk
Liontrust Sustainable Future Managed	Mixed Investment 40-85% Shares	GB0030030398	Medium risk
Merian Corporate Bond	Sterling Corporate Bond	GB00B1XG7X39	Low risk
Merian Monthly Income Bond	Sterling Strategic Bond	GB00B1XG8187	Low risk
Premier Diversified Growth	Mixed Investment 40-85% Shares	GB00B8BJV423	Medium risk
Premier Diversified Income	Mixed Investment 20-60% Shares	GB00BYPDV863	Medium risk
Premier Global Infrastructure Income	Global Equity Income	GB0031637738	Medium risk
Rathbone UK Opportunities Fund	UK All Companies	GB0030430804	High risk
Royal London UK Government Bond	UK Gilts	GB00B881TW52	Medium risk
Sarasin Thematic Global Equity (Sterling Hedged)	Global	GB00B83F3755	High risk
Schroder Sterling Corporate Bond	Sterling Corporate Bond	GB0009379370	Low risk
Schroder Strategic Bond	Sterling Strategic Bond	GB00B7FPS593	Low risk
Threadneedle UK Smaller Companies	UK Smaller Companies	GB0001530343	High risk
Vanguard UK Long Duration Gilt Index	UK Gilts	GB00B4M89245	High risk
VT Gravis Clean Energy Income	Global	GB00BFN4H792	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):

Name	Sector	ISIN Code	Risk
ASI Strategic Bond	Sterling Strategic Bond	GB00BWK27Z36	Low risk
Close Select Fixed Income	Sterling Strategic Bond	GB00BD6R7Y87	Low risk
First State Emerging Markets Bond	Global EM Bonds - Hard Currency	GB00B6R3H571	Low risk
GAM Credit Opportunities GBP	Sterling Strategic Bond	GB00BYQJ5G92	Low risk
Invesco High Yield (UK)	Sterling High Yield	GB00B3RW7649	Low risk
Liontrust Sustainable Future Corporate Bond	Sterling Corporate Bond	GB0030029069	Low risk
Merian Corporate Bond	Sterling Corporate Bond	GB00B1XG7X39	Low risk
Merian Monthly Income Bond	Sterling Strategic Bond	GB00B1XG8187	Low risk
Schroder Sterling Corporate Bond	Sterling Corporate Bond	GB0009379370	Low risk
Schroder Strategic Bond	Sterling Strategic Bond	GB00B7FPS593	Low risk
ASI European Real Estate Share	Property Other	GB00BWK26907	Medium risk
First State Diversified Growth	Flexible Investment	GB00BVXC2S15	Medium risk
Kames Ethical Cautious Managed	Mixed Investment 20-60% Shares	GB00B1N9DX45	Medium risk
LF Miton Global Infrastructure Income	Global Equity Income	GB00BD3H9L21	Medium risk
Liontrust Sustainable Future Managed	Mixed Investment 40-85% Shares	GB0030030398	Medium risk
Premier Diversified Growth	Mixed Investment 40-85% Shares	GB00B8BJV423	Medium risk
Premier Diversified Income	Mixed Investment 20-60% Shares	GB00BYPDV863	Medium risk
Premier Global Infrastructure Income	Global Equity Income	GB0031637738	Medium risk
Royal London UK Government Bond	UK Gilts	GB00B881TW52	Medium risk
VT Gravis Clean Energy Income	Global	GB00BFN4H792	Medium risk
ASI UK Real Estate Share	Property Other	GB00B0XWNN66	High risk
AXA Framlington Biotech	Specialist	GB0031007254	High risk
Baillie Gifford Positive Change	Global	GB00BYVGKV59	High risk
JPM UK Smaller Companies	UK Smaller Companies	GB0030880255	High risk
LF Canlife Asia Pacific	Asia Pacific Excluding Japan	GB00B719QW87	High risk
LF Gresham House UK Multi Cap Income	UK Equity Income	GB00BYXVGS75	High risk
Rathbone UK Opportunities Fund	UK All Companies	GB0030430804	High risk
Sarasin Thematic Global Equity (Sterling Hedged)	Global	GB00B83F3755	High risk
Threadneedle UK Smaller Companies	UK Smaller Companies	GB0001530343	High risk
Vanguard UK Long Duration Gilt Index	UK Gilts	GB00B4M89245	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
ASI (AAM) UK Smaller Companies	UK Smaller Companies	GB00B07T4859	High risk
ASI Sterling Bond	Global Bonds	GB00BWK27087	Medium risk
AXA Ethical Distribution	Mixed Investment 20-60% Shares	GB0005409262	Low risk
Barings Strategic Bond	Global Bonds	GB0000831759	Medium risk
Close FTSE techMARK	Technology & Telecommunications	GB00B87JKQ15	High risk
Fidelity Moneybuilder Balanced	Mixed Investment 40-85% Shares	GB00B7XJFX07	Low risk
Liontrust European Enhanced Income (Hedged)	Europe Excluding UK	GB00BD2WZ873	Medium risk
M&G Global Listed Infrastructure	Global	GB00BF00R928	Medium risk
Premier Ethical	UK All Companies	GB0004073002	High risk
Royal London Sustainable Diversified Trust	Mixed Investment 20-60% Shares	GB00B844WJ68	Low risk
Sarasin Global Dividend (Sterling Hedged)	Global Equity Income	GB00BGDF8439	Medium risk
Sarasin Global Equity Real Return	Flexible Investment	GB00B7W4B053	Medium risk
Sarasin Responsible Global Equity (Sterling Hedged)	Global	GB00B816B655	Medium risk
Slater Growth	UK All Companies	GB00B0706C66	Medium risk
UBS S&P 500 Index	North America	GB00BMN91T34	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 16% (14%)
• Alternatives 12% (12%) - includes absolute return strategies & some bond exposure
• UK Corporate Fixed Interest (i.e UK bonds) 7% (6%)
• Emerging Market Fixed Income 4% (0%)
• North American Equities 11% (8%)
• European Equities 4% (8%)
• Japanese Equities 0% (0%)
• Property 10% (7%)
• UK Equities 17% (25%)
• Gilts 6% (6%)
• Cash 3% (5%)
• Emerging market equities 0% (0%)
• Other international equities 4% (6%)
• Asian Equities 3% (0%)
• Commodities and Energy 3% (3%)

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 outperformed the average managed fund and the market.

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