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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