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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