80-20 Investor Best of the Best Selection – March 2021 Update

Commentary

Following on from a stellar January the BOTB started February very strongly as can be seen in the chart below. But as was expected February became a month of two halves with a bond market sell-off which ultimately unsettled equity markets.

In a market where both bonds and equities fall in tandem, there is no hiding place other than cash and as I explained in last week’s newsletter all boats sink at once, as emphasised by how the average professionally managed portfolios in the chart above, fell in tandem despite differing equity components.

Inevitably the BOTB gave up some of its monthly profit, as shown in the chart above. The best performing funds during the first half of the month were generally the worst-performing funds in the second half of February. The table below shows the top 7 performers within the BOTB across the whole month. UK small cap and value plays top the table but it is also interesting to see Barings Global Agriculture, which is an inflation play and a recent addition to the BOTB, among the top performers.

Fund	% return in February
Premier Miton UK Smaller Companies	14
Premier Miton UK Value Opportunities	8.09
Barings Global Agriculture	5.97
MI Chelverton UK Equity Growth	4.19
FP Octopus UK Micro Cap Growth	3.18
Baillie Gifford Pacific	3.03
Schroder UK Dynamic Absolute Return	2.57

Despite the market wobble the BOTB, as a whole, finished the month in positive territory, which explains why 19 out of last month’s selection have retained their place. A notable absentee is the tech-heavy Baillie Gifford Long Term Global Growth Investment fund, which has been a mainstay of the BOTB since the market rebounded after the Covid-19 crash. The fund is up 98.60%, almost doubling, since its first inclusion in the BOTB in April 2020. This compares to an average return of 40.27% from its peers. However, its performance has been disappointing, by comparison, over the last six months and the fund also lost 4.14% during February. So the fund has dropped out of the BOTB for now. Interestingly the change was made just ahead of further technology stock weakness in the first week of March.

The BOTB's European equity exposure has been reduced again and removed completely. This month there is a move away from funds with a more growth/technology focus, noted by the reduced number of Baillie Gifford funds. JPM Natural Resources, a new introduction this month, is another commodity/inflation play that has performed well year to date. Japanese equities return to the fold at the expense of Chinese equities. Fidelity UK Smaller Companies also returns after a period of absenteeism while Asian and emerging markets still make up the largest equity component of the BOTB's asset mix, followed closely by UK equities. Once again we see a mix of value-focused funds and growth funds throughout the selection. The overall equity exposure sits around 62%.

Gilts remain excluded from the low-risk portion of the BOTB which instead has increased exposure to Targeted Absolute Return funds in the face of the bond market sell-off.

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 and a half 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.

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
Allianz Total Return Asian Equity	Asia Pacific Excluding Japan	GB00B1FRQV53	Medium risk
ASI Strategic Bond	Sterling Strategic Bond	GB00BWK27X12	Low risk
Baillie Gifford Pacific	Asia Pacific Excluding Japan	GB0006063233	High risk
Baillie Gifford Positive Change	Global	GB00BYVGKV59	High risk
Barclays Multi-Asset Cautious	Mixed Investment 0-35% Shares	GB00BD93Z723	Low risk
Barings Global Agriculture	Specialist	GB00B3B9V927	High risk
Close Select Fixed Income	Sterling Strategic Bond	GB00BD6R7Y87	Low risk
ES R&M UK Recovery	UK All Companies	GB00B614J053	Medium risk
Fidelity Global High Yield	Sterling High Yield	GB00B7K7SQ18	Low risk
Fidelity Japan	Japan	GB00B882N041	Medium risk
Fidelity UK Smaller Companies	UK Smaller Companies	GB00B7VNMB18	High risk
FP Octopus UK Micro Cap Growth	UK Smaller Companies	GB00BYQ7HN43	High risk
FP Pictet Multi Asset Portfolio	Targeted Absolute Return	GB00BVYTTC41	Low risk
FSSA Greater China Growth	China/Greater China	GB0033874321	Medium risk
Invesco Asian Equity Income (UK)	Asia Pacific Excluding Japan	GB00B4JR4R48	Medium risk
Invesco Global Emerging Markets (UK)	Global Emerging Markets	GB00B3RW7S64	High risk
JPM Natural Resources	Specialist	GB0031835118	High risk
Liontrust Global Dividend	Global Equity Income	GB00B9225P64	Medium risk
Liontrust Global Smaller Companies	Global	GB00B29MXF68	High risk
Liontrust India	Specialist	GB00B1L6DV51	High risk
Merian Monthly Income Bond	Sterling Strategic Bond	GB00B1XG8187	Low risk
MI Chelverton UK Equity Growth	UK All Companies	GB00BP855B75	Medium risk
Premier Miton Defensive Growth	Targeted Absolute Return	GB00B832BD89	Low risk
Premier Miton Diversified Growth	Mixed Investment 40-85% Shares	GB00B8BJV423	Medium risk
Premier Miton UK Smaller Companies	UK Smaller Companies	GB00B818N094	High risk
Schroder MM Diversity	Mixed Investment 20-60% Shares	GB00B60CZD52	Low risk
Schroder UK Dynamic Absolute Return	Targeted Absolute Return	GB00B3N74T57	Low risk
T. Rowe Price Global Focused Growth Equity	Global	GB00BD446774	Medium risk
Threadneedle Dynamic Real Return	Targeted Absolute Return	GB00B93TQ868	Low risk
VT Tyndall North American	North America	GB00BYPZY050	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	GB00BWK27X12	Low risk
Barclays Multi-Asset Cautious	Mixed Investment 0-35% Shares	GB00BD93Z723	Low risk
Close Select Fixed Income	Sterling Strategic Bond	GB00BD6R7Y87	Low risk
Fidelity Global High Yield	Sterling High Yield	GB00B7K7SQ18	Low risk
FP Pictet Multi Asset Portfolio	Targeted Absolute Return	GB00BVYTTC41	Low risk
Merian Monthly Income Bond	Sterling Strategic Bond	GB00B1XG8187	Low risk
Premier Miton Defensive Growth	Targeted Absolute Return	GB00B832BD89	Low risk
Schroder MM Diversity	Mixed Investment 20-60% Shares	GB00B60CZD52	Low risk
Schroder UK Dynamic Absolute Return	Targeted Absolute Return	GB00B3N74T57	Low risk
Threadneedle Dynamic Real Return	Targeted Absolute Return	GB00B93TQ868	Low risk
Allianz Total Return Asian Equity	Asia Pacific Excluding Japan	GB00B1FRQV53	Medium risk
ES R&M UK Recovery	UK All Companies	GB00B614J053	Medium risk
Fidelity Japan	Japan	GB00B882N041	Medium risk
FSSA Greater China Growth	China/Greater China	GB0033874321	Medium risk
Invesco Asian Equity Income (UK)	Asia Pacific Excluding Japan	GB00B4JR4R48	Medium risk
Liontrust Global Dividend	Global Equity Income	GB00B9225P64	Medium risk
MI Chelverton UK Equity Growth	UK All Companies	GB00BP855B75	Medium risk
Premier Miton Diversified Growth	Mixed Investment 40-85% Shares	GB00B8BJV423	Medium risk
T. Rowe Price Global Focused Growth Equity	Global	GB00BD446774	Medium risk
VT Tyndall North American	North America	GB00BYPZY050	Medium risk
Baillie Gifford Pacific	Asia Pacific Excluding Japan	GB0006063233	High risk
Baillie Gifford Positive Change	Global	GB00BYVGKV59	High risk
Barings Global Agriculture	Specialist	GB00B3B9V927	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
JPM Natural Resources	Specialist	GB0031835118	High risk
Liontrust Global Smaller Companies	Global	GB00B29MXF68	High risk
Liontrust India	Specialist	GB00B1L6DV51	High risk
Premier Miton UK Smaller Companies	UK Smaller Companies	GB00B818N094	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
7IM Moderately Cautious	Mixed Investment 0-35% Shares	GB0033953497	Low risk
Baillie Gifford Long Term Global Growth Investment	Global	GB00BD5Z0Z54	High risk
Baillie Gifford Managed	Mixed Investment 40-85% Shares	GB0006010168	Medium risk
Barings Eastern Trust	Asia Pacific Excluding Japan	GB0000799923	Medium risk
Barings Korea Trust	Specialist	GB0000840719	High risk
Fidelity China Consumer	China/Greater China	GB00B82ZSC67	Medium risk
Fidelity Multi Asset Open Defensive	Mixed Investment 0-35% Shares	GB00BC7GXK56	Low risk
LF Miton UK Value Opportunities	UK All Companies	GB00B8KV0M06	High risk
Liontrust Global Alpha	Flexible Investment	GB0031190555	Medium risk
Rathbone Ethical Bond Fund	Sterling Corporate Bond	GB0030957137	Low risk
Stewart Investors Asia Pacific Sustainability.	Specialist	GB00B0TY6V50	Medium 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 15% (17%)
• Alternatives 17% (12%) - includes absolute return strategies & some bond exposure
• UK Corporate Fixed Interest (i.e UK bonds) 2% (5%)
• Emerging Market Fixed Income 0% (0%)
• North American Equities 12% (14%)
• European Equities 0% (3%)
• Chinese Equities 4% (7%)
• Japanese Equities 4% (0%)
• Property 0% (0%)
• UK Equities 17% (15%)
• Gilts 0% (0%)
• Cash 4% (4%)
• Emerging market equities 4% (4%)
• Other international equities 3% (0%)
• Asian Equities 11% (15%)
• Commodities and Energy 7% (4%)

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.

 

 

 

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