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

Commentary

11 funds from last month's list of 30 remain the same, while the BOTB's overall equity exposure inches up from around 40% to 49% which is a reflection of the continued strength in equity markets, particularly during April. The BOTB's low equity exposure meant that during a month when equities performed well that the average return for the BOTB was 0.95% versus 2.87% for the average professionally managed fund from the Mixed Investment 40-85% Shares sector and 1.81% for the average fund in the Mixed Investment 20-60% Shares sector.

From last month's selection, the best performers during April were Fidelity China Consumer, BlackRock Emerging Markets and Baillie Gifford Emerging Markets Leading Companies which made 4.77%, 3.86% and 3.71% respectively. M&G Global Listed Infrastructure also had yet another good month, up over 2%. The funds that disappointed were the gilt focused funds which were hampered by a fall in the value of the pound and have now been axed from the BOTB. Conversely, UK equities received a boost from the falling pound which perhaps explains why we've now seen a modest exposure creep back into the BOTB this month.

While there are still no Japanese or European equity funds in the BOTB some European equity exposure has crept in via the more diversified global funds. That is perhaps a reflection of the fact that European equities have started to play catchup with the US. With emerging markets and Chinese equities continuing to show strength it perhaps is not surprising that they have an increased exposure in the BOTB this month, alongside Asian 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 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.

May'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
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
BlackRock UK Absolute Alpha	Targeted Absolute Return	GB00B5ZNQ990	Low risk
Fidelity Asia	Asia Pacific Excluding Japan	GB00B6Y7NF43	High risk
Fidelity China Consumer	China/Greater China	GB00B82ZSC67	High risk
Fidelity Global Property	Property Other	GB00B7K2NZ09	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 Fixed Interest Monthly Income	Sterling Strategic Bond	GB0001920486	Low 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
LF Seneca Diversified Growth	Mixed Investment 40-85% Shares	GB00B7FPW579	Medium risk
LF Seneca Diversified Income	Mixed Investment 20-60% Shares	GB00B7JTF560	Low 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
Margetts Venture Strategy	Flexible Investment	GB00B6VBDR16	Medium risk
Neptune Income	UK Equity Income	GB00B8JCR452	Medium risk
Newton Real Return	Targeted Absolute Return	GB0001642635	Low 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
Standard Life Investments Emerging Market Debt	Global Emerging Markets Bond	GB00B8K56P77	Low risk
T. Rowe Price Global Technology Equity	Technology & Telecommunications	GB00BD446K01	High risk
TB Evenlode Global Income	Global Equity Income	GB00BF1QMV61	Medium risk

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

Here is May'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
BlackRock UK Absolute Alpha	Targeted Absolute Return	GB00B5ZNQ990	Low 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
Janus Henderson Fixed Interest Monthly Income	Sterling Strategic Bond	GB0001920486	Low risk
LF Seneca Diversified Income	Mixed Investment 20-60% Shares	GB00B7JTF560	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 Sustainable Managed Growth Trust	Mixed Investment 0-35% Shares	GB00B8H7XS88	Low risk
Standard Life Investments Emerging Market Debt	Global Emerging Markets Bond	GB00B8K56P77	Low risk
Aberdeen Emerging Markets Bond	Global Emerging Markets Bond	GB00B5L9HN22	Medium risk
Baillie Gifford Global Income Growth	Global Equity Income	GB0005772586	Medium 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
LF Seneca Diversified Growth	Mixed Investment 40-85% Shares	GB00B7FPW579	Medium risk
Liontrust Sustainable Future Cautious Managed	Mixed Investment 40-85% Shares	GB00BMN90304	Medium risk
Margetts Venture Strategy	Flexible Investment	GB00B6VBDR16	Medium risk
Neptune Income	UK Equity Income	GB00B8JCR452	Medium risk
Royal London Sustainable Leaders Trust	UK All Companies	GB00B7V23Z99	Medium risk
TB Evenlode Global Income	Global Equity Income	GB00BF1QMV61	Medium 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
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 Global Property	Property Other	GB00B7K2NZ09	High risk
First State Greater China Growth	China/Greater China	GB0033874321	High risk
Premier Global Infrastructure Income	Global Equity Income	GB0031637738	High risk
T. Rowe Price Global Technology Equity	Technology & Telecommunications	GB00BD446K01	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
Allianz Gilt Yield	UK Gilts	GB0031383283	Low risk
AXA Sterling Index Linked Bond	UK Index Linked Gilts	GB00B02Y6B22	Medium risk
Baillie Gifford Investment Grade Bond	Sterling Corporate Bond	GB0030816481	Low risk
BlackRock Emerging Markets	Global Emerging Markets	GB00B4R9F681	High risk
BMO Pacific Equity	Asia Pacific Excluding Japan	GB0033143115	High risk
Fidelity Global Dividend	Global Equity Income	GB00B7GJPN73	Medium risk
Fidelity Global Enhanced Income	Global Equity Income	GB00BD1NLJ41	Medium risk
First State Diversified Growth	Flexible Investment	GB00BVXC2S15	Medium risk
First State Global Listed Infrastructure	Global	GB00B24HJL45	High risk
HSBC UK Gilt Index	UK Gilts	GB00B4581C50	Low risk
Janus Henderson Preference & Bond	Sterling Strategic Bond	GB0007535866	Low risk
Janus Henderson Strategic Bond	Sterling Strategic Bond	GB0007495293	Low risk
M&G Global Listed Infrastructure	Global	GB00BF00R928	Medium risk
Newton Asian Income	Asia Pacific Excluding Japan	GB00B0MY6Z69	Medium risk
Royal London Index Linked	UK Index Linked Gilts	GB00B8DDWW71	Medium risk
Santander Sterling Government Bond	UK Gilts	GB00BSTLRD18	Low risk
Schroder Global Cities Real Estate Income	Property Other	GB00B50MLC91	High risk
Standard Life Investments Global REIT	Property Other	GB00B7MR5W47	High risk
Standard Life Investments UK Gilt	UK Gilts	GB00B6WZXS38	Low 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% (12%)
• Alternatives 20% (18%) - includes absolute return strategies & some bond exposure
• UK Corporate Fixed Interest (i.e UK bonds) 6% (4%)
• Emerging Market Fixed Income 8% (6%)
• North American Equities 9% (7%)*
• European Equities 4% (0%)
• Japanese Equities 0% (0%)
• Property 4% (12%)*
• UK Equities 11% (5%)
• Gilts 0% (12%)
• Cash 0% (5%)
• Emerging market equities 15% (10%)
• Other international equities 4% (3%)
• Asian Equities 6% (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. Therefore the BOTB has an overall US equity exposure of around 11-13% taking this into account.

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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