80-20 Investor Best of the Best Selection – November 2016 Update

Commentary

10 funds from last month's 30 Best of the Best Selection regained their position in November's shortlist. In the last update before next week's US election it's interesting to see that a US equity exposure has crept back into the portfolio, largely a result of the region holding up better than most other equity markets during October. If you recall last month there was no US equity exposure in the Best of the Best Selection at all. Interestingly, the new weighting is mostly a result of investing the cash held within last month's asset allocation which shows that the US exposure is a complement rather than a replacement within the existing portfolio asset mix. The lack of US exposure didn't hinder the Best of the Best Selection (BOTB) in October as it made 2.39% for the month, versus 1.44% for the average multi-asset managed fund and 0.49% for the FTSE 100.

Global bonds remain a significant component of the Selection and the global theme is apparent in the geographical make up of the equity component. We still see a number of managed funds from the Mixed sectors featured, which reflects the diversified nature of the portfolio while the low risk end of the portfolio again focuses on absolute return funds and managed funds, with less reliance on bonds.

Although the portfolio has around 50% direct exposure to equities the 'alternatives' listed include exposure to equities but via derivatives etc. Unfortunately the opaque 'alternatives' label is a result of some fund managers' inability to fit their fund holdings into one of the Investment Association's official categories. So it's something DIY investors are stuck with.

At the foot of this article you can see how the 80-20 Investor Portfolio has continued to outperform the professional fund managers as well as the market since its launch over 2 years ago.

Below I list this month's selection in full with the 10 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.

November'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 Level
Artemis - US Extended Alpha	North America	GB00BMMV5G59	Medium risk
AXA - Framlington Managed Income	Sterling Strategic Bond	GB00B6RPX228	Low risk
Baillie Gifford - Emerging Markets Leading Companies	Global Emerging Markets	GB00B06HZN29	High risk
Baillie Gifford - Japanese	Japan	GB0006010838	High risk
BlackRock - NURS II Consensus 60	Mixed Investment 20%-60% Shares	GB00B86VJL67	Low risk
BlackRock - Overseas Corporate Bond Tracker	Global Bonds	GB00B58YKH53	Medium risk
Henderson - China Opportunities	China/Greater China	GB0031860934	High risk
IFSL - Brooks Macdonald Defensive Capital	Targeted Absolute Return	GB00B61MR835	Low risk
Insight - Inflation Linked Corporate Bond	Sterling Strategic Bond	GB00B8CJGZ73	Low risk
Invesco Perpetual - Asian	Asia Pacific Excluding Japan	GB00B8N44Q86	High risk
JPM - Europe Dynamic Ex UK	Europe Excluding UK	GB00B02L5M76	Medium risk
Jupiter - Global Emerging Markets	Global Emerging Markets	GB00B4JVHP59	High risk
Jupiter - UK Special Situations	UK All Companies	GB0004777347	Medium risk
L&G - Global 100 Index Trust	Global	GB00B0CNH056	Medium risk
L&G - Global Technology Index Trust	Technology & Telecom	GB00B0CNH163	High risk
Man GLG - Corporate Bond	Global Bonds	GB00B0118B85	Medium risk
Marlborough - European Multi-Cap	Europe Excluding UK	GB0001719730	Medium risk
Old Mutual - Cirilium Conservative	Mixed Investment 0%-35% Shares	GB00B4LTHW43	Low risk
S&W - Saltus Multi Asset Class	Targeted Absolute Return	GB00B43T2834	Low risk
Schroder - European Alpha Plus	Europe Excluding UK	GB00B7LDKR32	Medium risk
Schroder - Tokyo	Japan	GB00B4SZR818	High risk
Threadneedle - Defensive	Mixed Investment 0%-35% Shares	GB0032010042	Low risk
Threadneedle - Defensive Equity & Bond	Mixed Investment 0%-35% Shares	GB0032009937	Low risk
Threadneedle - Dollar Bond	Global Bonds	GB00B9BRCL73	Medium risk
Threadneedle - Dynamic Real Return	Targeted Absolute Return	GB00BWWC6P48	Low risk
Threadneedle - European High Yield Bond	Global Bonds	GB00B6RRFW23	Medium risk
Threadneedle - Japan	Japan	GB00B7TRT705	High risk
UBS - Global Emerging Markets Equity	Global Emerging Markets	GB0033696013	High risk
Vanguard - LifeStrategy 80% Equity	Mixed Investment 40%-85% Shares	GB00B4PQW151	Medium risk

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

Here is November'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 Level
AXA - Framlington Managed Income	Sterling Strategic Bond	GB00B6RPX228	Low risk
BlackRock - NURS II Consensus 60	Mixed Investment 20%-60% Shares	GB00B86VJL67	Low risk
IFSL - Brooks Macdonald Defensive Capital	Targeted Absolute Return	GB00B61MR835	Low risk
Insight - Inflation Linked Corporate Bond	Sterling Strategic Bond	GB00B8CJGZ73	Low risk
Old Mutual - Cirilium Conservative	Mixed Investment 0%-35% Shares	GB00B4LTHW43	Low risk
S&W - Saltus Multi Asset Class	Targeted Absolute Return	GB00B43T2834	Low risk
Threadneedle - Defensive	Mixed Investment 0%-35% Shares	GB0032010042	Low risk
Threadneedle - Defensive Equity & Bond	Mixed Investment 0%-35% Shares	GB0032009937	Low risk
Threadneedle - Dynamic Real Return	Targeted Absolute Return	GB00BWWC6P48	Low risk
Artemis - US Extended Alpha	North America	GB00BMMV5G59	Medium risk
BlackRock - Overseas Corporate Bond Tracker	Global Bonds	GB00B58YKH53	Medium risk
JPM - Europe Dynamic Ex UK	Europe Excluding UK	GB00B02L5M76	Medium risk
Jupiter - UK Special Situations	UK All Companies	GB0004777347	Medium risk
L&G - Global 100 Index Trust	Global	GB00B0CNH056	Medium risk
Man GLG - Corporate Bond	Global Bonds	GB00B0118B85	Medium risk
Marlborough - European Multi-Cap	Europe Excluding UK	GB0001719730	Medium risk
Schroder - European Alpha Plus	Europe Excluding UK	GB00B7LDKR32	Medium risk
Threadneedle - Dollar Bond	Global Bonds	GB00B9BRCL73	Medium risk
Threadneedle - European High Yield Bond	Global Bonds	GB00B6RRFW23	Medium risk
Vanguard - LifeStrategy 80% Equity	Mixed Investment 40%-85% Shares	GB00B4PQW151	Medium risk
Baillie Gifford - Emerging Markets Leading Companies	Global Emerging Markets	GB00B06HZN29	High risk
Baillie Gifford - Japanese	Japan	GB0006010838	High risk
Henderson - China Opportunities	China/Greater China	GB0031860934	High risk
Invesco Perpetual - Asian	Asia Pacific Excluding Japan	GB00B8N44Q86	High risk
Jupiter - Global Emerging Markets	Global Emerging Markets	GB00B4JVHP59	High risk
L&G - Global Technology Index Trust	Technology & Telecom	GB00B0CNH163	High risk
Schroder - Tokyo	Japan	GB00B4SZR818	High risk
Threadneedle - Japan	Japan	GB00B7TRT705	High risk
UBS - Global Emerging Markets Equity	Global Emerging Markets	GB0033696013	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 Level
Aberdeen - Japan Equity	Japan	GB0004521620	High risk
Architas MA - Active Moderate Income	Mixed Investment 0%-35% Shares	GB00B8HWD272	Low risk
AXA - Sterling Index Linked Bond	UK Index - Linked Gilts	GB00B02Y6C39	High risk
Barclays - Sterling Bond	Sterling Strategic Bond	GB00B72Y6K08	Low risk
BlackRock - Asia Special Situations	Asia Pacific Excluding Japan	GB00BJGZZ065	High risk
BlackRock - Emerging Markets	Global Emerging Markets	GB00B4R9F681	High risk
CF Canlife - Global Bond	Global Bonds	GB00B4LW2X97	Medium risk
FP CRUX - European Special Situations	Europe Excluding UK	GB00BTJRQ064	Medium risk
HSBC - Corporate Bond	Sterling Corporate Bond	GB00B85KC152	Low risk
JPM - Asia	Asia Pacific Excluding Japan	GB0030879695	High risk
Legg Mason - IF ClearBridge Global Equity Income	Global Equity Income	GB00B2R8FL62	Medium risk
Newton - Real Return	Targeted Absolute Return	GB00B7VVXF60	Low risk
Royal London - Sustainable Diversified Trust	Mixed Investment 20%-60% Shares	GB00B844WJ68	Low risk
Royal London - Sustainable Managed Growth Trust	Mixed Investment 0%-35% Shares	GB00B8H7XS88	Low risk
Franklin - UK Equity Income	UK Equity Income	GB00B7DRD638	Medium risk
Standard Life Investments - European Ethical Equity	Europe Excluding UK	GB00B3N24788	Medium risk
Stewart Investors - Worldwide Sustainability	Global	GB00B845Y045	Medium risk
SVS Church House - Tenax Absolute Return Strategies	Targeted Absolute Return	GB00B28KSG75	Low risk
TB Saracen - Global Income & Growth	Global Equity Income	GB00B8MG4091	Medium risk
Wise Investments - TB Wise Investment	Flexible Investment	GB0034272533	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 21% (17%)
• Alternatives/Other 19% (20%) - mostly absolute return strategies
• UK Corporate Fixed Interest (i.e UK bonds) 6% (5%)
• North American Equities 9% (0%)
• European Equities 12% (13%)
• Japanese Equities 11% (7%)
• Other international equities 0% (6%)
• Property 0% (0%)
• UK Equities 8% (7%)
• Cash 0% (6%)
• Asian equities 5% (6%)
• Asia Pacific Emerging equities 9% (13%)

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 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.

As you can see, since launch in August 2014 the 80-20 Investor portfolio has HUGELY outperformed the average managed fund and the market. The large spike in performance in the 80-20 Investor portfolio on the right hand side of the chart is where the portfolio rallied after the Brexit referendum while global markets plummeted.

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