Commentary
The latest BOTB update paints a very different picture from last time. Whereas last time only four funds retained their BOTB status, this time around 25 funds retained their status with just five funds being replaced by new ones. That is one of the most consistent handovers from one month to the next we've ever experienced. It demonstrates the resilience of the funds that made the BOTB last month.
Every fund within last month's BOTB made a profit, except one which was the Artemis
US Absolute Return (which lost 0.88% over the month). It is one of the few funds that didn't make it into this May's BOTB. But the 80-20 Investor algorithm correctly identified a number of funds which rode the developing trends to produce eye-watering one-month returns during May. The top 6 are shown below and captured the winning trends of investing in US equities, technology stocks and healthcare stocks:
| Name | 1-month return % |
| Liontrust Global Technology | 18.22 |
| Baillie Gifford Positive Change | 16.36 |
| T. Rowe Price Global Technology Equity | 15.46 |
| AXA Framlington Biotech | 14.96 |
| Baillie Gifford Long Term Global Growth Investment | 13.15 |
| Schroder Global Healthcare | 11.58 |
Perhaps it is unsurprising then that most funds retained their position in this month's BOTB. On average the BOTB selection made 4.58% during the month of May, which is a great result given that it had only 27% exposure to equities. As explained in May's monthly newsletter, the BOTB took advantage of the ongoing bull market in areas of fixed income.
The BOTB asset mix has remained almost the same as last month, but now has a 37% exposure to equities. Most of this is via US equities. The BOTB still has some exposure to Chinese equities and Asian equities as they have been among the best performing equity markets during the crisis.
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 over five years ago.
Below I list this month's selection in full with the 25 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 |
| Allianz Gilt Yield | UK Gilts | GB0031383283 | Medium risk |
| Allianz Strategic Bond | Sterling Strategic Bond | GB00B06T9362 | Low risk |
| ASI (AAM) Sterling Government Bond | UK Gilts | GB00BWK26Q79 | Low risk |
| ASI Sterling Bond | Global Bonds | GB00BWK26Y53 | Medium risk |
| ASI UK Government Bond | UK Gilts | GB00B6WZXS38 | Medium risk |
| AXA Framlington American Growth | North America | GB00B5LXGG05 | High risk |
| AXA Framlington Biotech | Specialist | GB00B784NS11 | High risk |
| AXA Framlington Global Technology | Technology & Telecommunications | GB00B4W52V57 | High risk |
| AXA Framlington Health | Specialist | GB00BRJZVQ71 | High risk |
| AXA Sterling Strategic Bond | Sterling Strategic Bond | GB00B02Y6L20 | Low risk |
| Baillie Gifford Long Term Global Growth Investment | Global | GB00BD5Z0Z54 | High risk |
| Baillie Gifford Positive Change | Global | GB00BYVGKV59 | High risk |
| Barclays Sterling Bond | Sterling Strategic Bond | GB00B72Y6K08 | Medium risk |
| BlackRock European Absolute Alpha | Targeted Absolute Return | GB00B4Y62W78 | Low risk |
| BNY Mellon International Bond | Global Bonds | GB0006779655 | Medium risk |
| JPM Global Ex UK Bond | Global Bonds | GB0030877210 | Low risk |
| JPM Global Macro | Targeted Absolute Return | GB00B09RGL45 | Low risk |
| Kames UK Equity Absolute Return | Targeted Absolute Return | GB00B504CH73 | Low risk |
| LF Canlife UK Government Bond | UK Gilts | GB00BLDYKJ43 | Medium risk |
| Liontrust Global Technology | Technology & Telecommunications | GB00BYXZ5N79 | High risk |
| Merian Global Strategic Bond | Sterling Strategic Bond | GB00B1XG7L17 | Low risk |
| Morgan Stanley US Advantage | North America | GB00BZ4CG750 | High risk |
| Royal London International Government Bond | Global Bonds | GB00B45XHL18 | Low risk |
| Schroder Gilt & Fixed Interest | UK Gilts | GB00BYTQ7F09 | Medium risk |
| Schroder Global Healthcare | Global | GB00B76V7Q08 | Medium risk |
| T. Rowe Price Dynamic Global Bond | Global Bonds | GB00BD0NLR34 | Low risk |
| T. Rowe Price Global Technology Equity | Technology & Telecommunications | GB00BD446K01 | High risk |
| Threadneedle China Opportunities | China/Greater China | GB00B1PRW734 | High risk |
| Troy Asset Management Ltd Trojan Ethical | Flexible Investment | GB00BJP0XX17 | Medium risk |
| Vanguard UK Long Duration Gilt Index | UK Gilts | GB00B4M89245 | 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 |
| T. Rowe Price Dynamic Global Bond | Global Bonds | GB00BD0NLR34 | Low risk |
| AXA Sterling Strategic Bond | Sterling Strategic Bond | GB00B02Y6L20 | Low risk |
| Kames UK Equity Absolute Return | Targeted Absolute Return | GB00B504CH73 | Low risk |
| BlackRock European Absolute Alpha | Targeted Absolute Return | GB00B4Y62W78 | Low risk |
| Allianz Strategic Bond | Sterling Strategic Bond | GB00B06T9362 | Low risk |
| ASI (AAM) Sterling Government Bond | UK Gilts | GB00BWK26Q79 | Low risk |
| Royal London International Government Bond | Global Bonds | GB00B45XHL18 | Low risk |
| Merian Global Strategic Bond | Sterling Strategic Bond | GB00B1XG7L17 | Low risk |
| JPM Global Macro | Targeted Absolute Return | GB00B09RGL45 | Low risk |
| JPM Global Ex UK Bond | Global Bonds | GB0030877210 | Low risk |
| Troy Asset Management Ltd Trojan Ethical | Flexible Investment | GB00BJP0XX17 | Medium risk |
| Vanguard UK Long Duration Gilt Index | UK Gilts | GB00B4M89245 | Medium risk |
| Allianz Gilt Yield | UK Gilts | GB0031383283 | Medium risk |
| ASI UK Government Bond | UK Gilts | GB00B6WZXS38 | Medium risk |
| BNY Mellon International Bond | Global Bonds | GB0006779655 | Medium risk |
| LF Canlife UK Government Bond | UK Gilts | GB00BLDYKJ43 | Medium risk |
| Schroder Global Healthcare | Global | GB00B76V7Q08 | Medium risk |
| Schroder Gilt & Fixed Interest | UK Gilts | GB00BYTQ7F09 | Medium risk |
| Barclays Sterling Bond | Sterling Strategic Bond | GB00B72Y6K08 | Medium risk |
| ASI Sterling Bond | Global Bonds | GB00BWK26Y53 | Medium risk |
| Baillie Gifford Long Term Global Growth Investment | Global | GB00BD5Z0Z54 | High risk |
| AXA Framlington Biotech | Specialist | GB00B784NS11 | High risk |
| Baillie Gifford Positive Change | Global | GB00BYVGKV59 | High risk |
| T. Rowe Price Global Technology Equity | Technology & Telecommunications | GB00BD446K01 | High risk |
| AXA Framlington Health | Specialist | GB00BRJZVQ71 | High risk |
| Liontrust Global Technology | Technology & Telecommunications | GB00BYXZ5N79 | High risk |
| Morgan Stanley US Advantage | North America | GB00BZ4CG750 | High risk |
| AXA Framlington American Growth | North America | GB00B5LXGG05 | High risk |
| AXA Framlington Global Technology | Technology & Telecommunications | GB00B4W52V57 | High risk |
| Threadneedle China Opportunities | China/Greater China | GB00B1PRW734 | 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 |
| Artemis US Absolute Return | Targeted Absolute Return Retail | GB00BMMV5N27 | Low risk |
| HSBC UK Gilt Index | UK Gilts | GB00B4581C50 | Medium risk |
| Janus Henderson Inst Overseas Bond | Global Bonds | GB0007673055 | High risk |
| Royal London UK Government Bond | UK Gilts | GB00B881TW52 | Medium risk |
| Threadneedle Global Bond | Global Bonds | GB0001533685 | 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 27% (32%)
- Alternatives 11% (9%) - includes absolute return strategies & some bond exposure
- UK Corporate Fixed Interest (i.e UK bonds) 2% (3%)
- Emerging Market Fixed Income 0% (0%)
- North American Equities 26% (16%)
- European Equities 5% (5%)
- Japanese Equities 0% (0%)
- Property 0% (0%)
- UK Equities 0% (0%)
- Gilts 21% (24%)
- Cash 2% (5%)
- Emerging market equities 2% (0%)
- Other international equities 0% (0%)
- Asian Equities 4% (6%)
- Commodities and Energy 0% (0%)
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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