80-20 Investor Best of the Best Selection – November 2017 Update

Commentary

16 funds from last month's 30 Best of the Best (BOTB) Selection regained their position in this month's shortlist. Most of those that didn't regain their place in this month's BOTB list remain in their respective Best Funds by Sector (BFBS) lists. The level of consistency in the BOTB selection is once again a reflection of the continued uptrend in equities.

October mostly picked up where August left off if you look at the latest heatmap. That meant taking investment risk was rewarded as Chinese, Asian, Emerging markets and technology stocks resumed their surge higher. As discussed in this month’s newsletter not a single 80-20 Investor BOTB lost money. In fact the lowest return was 0.42%, while the top performer was the Baring Eastern Trust with an eye-watering return of 7.27% in just one month. This drove the BOTB average performance to 3.09% for the month which compares to 2.25% for the average managed fund and 1.82% on the FTSE 100 (which is 100% equity).

Unsurprisingly Asian and Emerging market equities have cemented their position in this month’s BOTB. However, the most notable change, and the most significant for some time, is the reappearance of Japanese equity funds into the BOTB, largely at the expense of European equities. European equities did not perform badly as they largely shrugged off the political events in Catalonia. For example the Jupiter European fund made over 4% in October. However, the Japanese stock market has been boosted by a weaker yen as well as renewed hopes of more fiscal and monetary easing which would be good news for Japanese stocks. It was a change that perhaps should have come as no surprise especially when I tell you that some of the best performing Japanese equity funds made over 6.5% in October. That’s not to say European equities are terrible, it’s just that in the high risk space Japanese equities have been riding a stronger uptrend. Other notable changes this month include the reappearance of a technology fund in the high risk section while UK Smaller Companies have dropped back into the medium risk area which is dominated by UK equities, although the BOTB’s overall UK equity exposure is down on last month (see asset mix at the bottom of this article). Smaller companies across Europe, UK and the US once again enjoyed a good month and that is reflected in the retention of a global smaller companies fund in this month’s BOTB.

While the BOTB asset mix continues to be diversified the medium risk part of the selection now has less funds with direct equity exposure and instead includes a number of managed multi-asset funds. In terms of direct equity exposure the portfolio's exposure sits around 65%. At the foot of this article you can see how the 80-20 Investor Selection has continued to outperform the professional fund managers as well as the market since its launch three years ago.

Below I list this month's selection in full with the 16 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
Artemis High Income	Sterling Strategic Bond	GB00B2PLJN71	Low risk
Artemis US Select	North America	GB00BMMV5105	Medium risk
Baillie Gifford American	North America	GB0006061963	Medium risk
Baillie Gifford Emerging Markets Growth	Global Emerging Markets	GB0006020647	High risk
Baillie Gifford Global Discovery	Global	GB0006059330	Medium risk
Baillie Gifford High Yield Bond	Sterling High Yield	GB0030816713	Low risk
Baillie Gifford Japanese	Japan	GB0006011133	High risk
Baring Eastern Trust	Asia Pacific Excluding Japan	GB0000799923	High risk
CF Miton Cautious Multi Asset	Mixed Investment 20-60% Shares	GB00B0W1V856	Low risk
F&C Property Growth and Income	Property	GB00BQWJ8687	Low risk
Fidelity China Consumer	China/Greater China	GB00B82ZSC67	High risk
FP Apollo Multi Asset Balanced	Mixed Investment 20-60% Shares	GB00B3FPF276	Low risk
Henderson Global Technology	Technology & Telecommunication	GB0007698847	High risk
JPM Asia Growth	Asia Pacific Excluding Japan	GB0030879695	High risk
JPM Global Macro Balanced	Mixed Investment 0-35% Shares	GB00B09RGK38	Low risk
Jupiter UK Smaller Companies	UK Smaller Companies	GB0004911870	Medium risk
L&G High Income Trust	Sterling High Yield	GB00B0CNHJ41	Low risk
Liontrust Sustainable Future Absolute Growth	Flexible Investment	GB0030029622	Medium risk
Man GLG Strategic Bond	Sterling Strategic Bond	GB00B731HR48	Low risk
Man GLG UK Income	UK Equity Income	GB00B0117B11	Medium risk
Neptune Global Equity	Global	GB00B8DLY478	Medium risk
Neptune Japan Opportunities	Japan	GB00B3Z0Y815	High risk
Premier Diversified	Mixed Investment 40-85% Shares	GB00B8BJV423	Low risk
Schroder High Yield Opportunities	Sterling High Yield	GB00B83RDY83	Low risk
Standard Life Investments Global Emerging Markets Equity Income	Global Emerging Markets	GB00B8B02G41	High risk
Standard Life Investments Global Smaller Companies	Global	GB00B7KVX245	High risk
Standard Life Investments UK Equity Unconstrained	UK All Companies	GB00B7LK2232	Medium risk
Threadneedle China Opportunities	China/Greater China	GB00B1PRW734	High risk
TM Cavendish AIM	UK Smaller Companies	GB00B0JX3Z52	Medium risk
Wise Funds Limited TB Wise Multi-Asset Growth	Flexible Investment	GB0034272533	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
Artemis High Income	Sterling Strategic Bond	GB00B2PLJN71	Low risk
Baillie Gifford High Yield Bond	Sterling High Yield	GB0030816713	Low risk
CF Miton Cautious Multi Asset	Mixed Investment 20-60% Shares	GB00B0W1V856	Low risk
F&C Property Growth and Income	Property	GB00BQWJ8687	Low risk
FP Apollo Multi Asset Balanced	Mixed Investment 20-60% Shares	GB00B3FPF276	Low risk
JPM Global Macro Balanced	Mixed Investment 0-35% Shares	GB00B09RGK38	Low risk
L&G High Income Trust	Sterling High Yield	GB00B0CNHJ41	Low risk
Man GLG Strategic Bond	Sterling Strategic Bond	GB00B731HR48	Low risk
Premier Diversified	Mixed Investment 40-85% Shares	GB00B8BJV423	Low risk
Schroder High Yield Opportunities	Sterling High Yield	GB00B83RDY83	Low risk
Artemis US Select	North America	GB00BMMV5105	Medium risk
Baillie Gifford American	North America	GB0006061963	Medium risk
Baillie Gifford Global Discovery	Global	GB0006059330	Medium risk
Jupiter UK Smaller Companies	UK Smaller Companies	GB0004911870	Medium risk
Liontrust Sustainable Future Absolute Growth	Flexible Investment	GB0030029622	Medium risk
Man GLG UK Income	UK Equity Income	GB00B0117B11	Medium risk
Neptune Global Equity	Global	GB00B8DLY478	Medium risk
Standard Life Investments UK Equity Unconstrained	UK All Companies	GB00B7LK2232	Medium risk
TM Cavendish AIM	UK Smaller Companies	GB00B0JX3Z52	Medium risk
Wise Funds Limited TB Wise Multi-Asset Growth	Flexible Investment	GB0034272533	Medium risk
Baillie Gifford Emerging Markets Growth	Global Emerging Markets	GB0006020647	High risk
Baillie Gifford Japanese	Japan	GB0006011133	High risk
Baring Eastern Trust	Asia Pacific Excluding Japan	GB0000799923	High risk
Fidelity China Consumer	China/Greater China	GB00B82ZSC67	High risk
Henderson Global Technology	Technology & Telecommunication	GB0007698847	High risk
JPM Asia Growth	Asia Pacific Excluding Japan	GB0030879695	High risk
Neptune Japan Opportunities	Japan	GB00B3Z0Y815	High risk
Standard Life Investments Global Emerging Markets Equity Income	Global Emerging Markets	GB00B8B02G41	High risk
Standard Life Investments Global Smaller Companies	Global	GB00B7KVX245	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. Many of them remain in the Best funds by Sector selection:

Name	Sector	ISIN Code	Risk Level
Aberdeen Emerging Markets Bond	Global Emerging Markets Bond	GB00B5L9HN22	Medium risk
AXA Framlington Monthly Income	UK Equity Income	GB00B7MMK577	Medium risk
Baillie Gifford Global Select	Global	GB00BYNK7G95	Medium risk
BlackRock European Dynamic	Europe Excluding UK	GB00B5W2QB11	High risk
CF Miton European Opportunities	Europe Excluding UK	GB00BZ2K2M84	High risk
CF Seneca Diversified Growth	Mixed Investment 40-85% Shares	GB00B7FPW579	Low risk
CF Seneca Diversified Income	Mixed Investment 20-60% Shares	GB00B7JTF560	Low risk
Henderson China Opportunities	China/Greater China	GB0031860934	High risk
Henderson Fixed Interest Monthly Income	Sterling Strategic Bond	GB0001920486	Low risk
Jupiter European	Europe Excluding UK	GB0006664683	High risk
M&G Fund of Investment Trust Shares	Global	GB0031288680	Medium risk
Marlborough UK Micro Cap Growth	UK Smaller Companies	GB00B02TPH60	High risk
Sarasin Thematic Global Equity (Sterling Hedged)	Global	GB00B83F3755	Medium risk
Unicorn Mastertrust	Flexible Investment	GB0031269367	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 14% (14%)
• Alternatives 13% (13%) - includes absolute return strategies & property
• UK Corporate Fixed Interest (i.e UK bonds) 4% (3%)
• Emerging Market Fixed Interest 0% (3%)
• North American Equities 17% (10%)
• European Equities 3% (10%)
• Japanese Equities 8% (0%)
• Property 0% (0%)
• UK Equities 17% (25%)
• Cash 4% (5%)
• Asian equities 6% (3%)
• Asia Pacific Emerging equities 11% (9%)
• Other international equities 3% (5%)

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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