Commentary
20 funds from October's BOTB retain their place in November's shortlist. The average return from the BOTB was flat, after giving up its profits in the second half of the month, as shown in the chart below. Meanwhile, comparable professionally managed multi-asset funds on average lost between -1.12% and -1.78% over the same period, as shown.
The flat performance is a result of a divergence in fortunes for funds within the BOTB selection with almost as many funds losing value in October, which was a difficult month for investment markets, as the number that made a profit. The standout performers were Asian and emerging market equities along with fixed income funds. At the other end of the scale funds with exposure to European and UK equities underperformed. This mirrored the returns seen in the major equity market indices as shown below.
At the end of October, European and UK stocks reeled from a surge in coronavirus cases and new lockdown measures, as well as Brexit uncertainty, while US equities had one eye on the US election. Asian equities proved a shelter from these macro storms. It's perhaps unsurprising then the BOTB selection as a whole outperformed during October, given its minimal exposure to UK equities in particular. Meanwhile, its exposure to Asian and US equities boosted its relative performance.
With 20 funds remaining in the BOTB this month there is an air of familiarity. Allianz Strategic Bond rebounded from a lacklustre September to put in a strong performance of 1.13%, but it wasn't enough for it to stay in the BOTB. That doesn't make it a bad fund, after all it is still in the BFBS. Technology focussed funds, such as Baillie Gifford Long Term Global Growth Investment remain and at the time of writing are enjoying a strong start to November, following the US election fiasco.
Equities still dominate the BOTB with the BOTB's equity exposure at around 60%. Overall the asset mix of the BOTB remains broadly similar as last month with a focus on US equities over UK equities. But the big difference is that Chinese equities now make up around 7% of the portfolio along with increased exposure to Asian equities, at the expense of European and US equities. Also, it is interesting to see gilts creeping back into the low-risk portion of the BOTB alongside a mix of global bond funds, UK corporate bonds and absolute return funds.
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 six years ago.
Below I list this month's selection in full with the 20 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 |
| Allianz Total Return Asian Equity | Asia Pacific Excluding Japan | GB00B1FRQV53 | Medium risk |
| ASI Sterling Inflation-Linked Bond | UK Gilts | GB00BWK27319 | Low risk |
| Aubrey Capital Management Ltd Aubrey Global Conviction | Global | GB00B1L8XB18 | High risk |
| AXA Framlington Global Technology | Technology & Telecommunications | GB00B4W52V57 | High risk |
| Baillie Gifford European | Europe Excluding UK | GB0006058258 | High risk |
| Baillie Gifford Investment Grade Bond | Sterling Corporate Bond | GB0030816481 | Low risk |
| Baillie Gifford Long Term Global Growth Investment | Global | GB00BD5Z0Z54 | High risk |
| Baillie Gifford Managed | Mixed Investment 40-85% Shares | GB0006010168 | Medium risk |
| Baillie Gifford Multi Asset Growth | Targeted Absolute Return | GB00BY9C5Y31 | Low risk |
| Baillie Gifford Pacific | Asia Pacific Excluding Japan | GB0006063233 | High risk |
| Baillie Gifford Positive Change | Global | GB00BYVGKV59 | High risk |
| Barclays Europe (ex-UK) Alpha | Europe Excluding UK | GB00B72WQ825 | Medium risk |
| Barings Eastern Trust | Asia Pacific Excluding Japan | GB0000799923 | High risk |
| BMO Global Total Return Bond (GBP Hedged) | Global Bonds | GB0033145151 | Low risk |
| Fidelity China Consumer | China/Greater China | GB00B82ZSC67 | Medium risk |
| Fidelity Global High Yield | Sterling High Yield | GB00B7K7SQ18 | Low risk |
| Franklin US Opportunities | North America | GB00B7KCG406 | Medium risk |
| Invesco China Equity (UK) | China/Greater China | GB00B3RW8C79 | Medium risk |
| Invesco Global Bond (UK) | Global Bonds | GB00B3RW7B97 | Low risk |
| Invesco Global Focus (UK) | Global | GB00B3KJYG12 | High risk |
| JPM Asia Growth | Asia Pacific Excluding Japan | GB00B1XMSK57 | Medium risk |
| JPM Japan | Japan | GB00B1XMTP77 | Medium risk |
| LF Miton Cautious Multi Asset | Mixed Investment 20-60% Shares | GB00B0W1V856 | Low risk |
| LF Miton UK Smaller Companies | UK Smaller Companies | GB00B818N094 | High risk |
| Liontrust Global Alpha | Flexible Investment | GB0031190555 | Medium risk |
| Morgan Stanley Sterling Corporate Bond | Sterling Corporate Bond | GB0004757497 | Low risk |
| Rathbone Ethical Bond Fund | Sterling Corporate Bond | GB0030957137 | Low risk |
| Royal London Sustainable Managed Growth Trust | Mixed Investment 0-35% Shares | GB00B8H7XS88 | Low risk |
| T. Rowe Price Global Focused Growth Equity | Global | GB00BD446774 | Medium risk |
| Threadneedle Global Emerging Market Equity | Global Emerging Markets | GB00B10SJD63 | High 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 |
| ASI Sterling Inflation-Linked Bond | UK Gilts | GB00BWK27319 | Low risk |
| Baillie Gifford Investment Grade Bond | Sterling Corporate Bond | GB0030816481 | Low risk |
| Baillie Gifford Multi Asset Growth | Targeted Absolute Return | GB00BY9C5Y31 | Low risk |
| BMO Global Total Return Bond (GBP Hedged) | Global Bonds | GB0033145151 | Low risk |
| Fidelity Global High Yield | Sterling High Yield | GB00B7K7SQ18 | Low risk |
| Invesco Global Bond (UK) | Global Bonds | GB00B3RW7B97 | Low risk |
| LF Miton Cautious Multi Asset | Mixed Investment 20-60% Shares | GB00B0W1V856 | Low risk |
| Morgan Stanley Sterling Corporate Bond | Sterling Corporate Bond | GB0004757497 | Low risk |
| Rathbone Ethical Bond Fund | Sterling Corporate Bond | GB0030957137 | Low risk |
| Royal London Sustainable Managed Growth Trust | Mixed Investment 0-35% Shares | GB00B8H7XS88 | Low risk |
| Allianz Total Return Asian Equity | Asia Pacific Excluding Japan | GB00B1FRQV53 | Medium risk |
| Baillie Gifford Managed | Mixed Investment 40-85% Shares | GB0006010168 | Medium risk |
| Barclays Europe (ex-UK) Alpha | Europe Excluding UK | GB00B72WQ825 | Medium risk |
| Fidelity China Consumer | China/Greater China | GB00B82ZSC67 | Medium risk |
| Franklin US Opportunities | North America | GB00B7KCG406 | Medium risk |
| Invesco China Equity (UK) | China/Greater China | GB00B3RW8C79 | Medium risk |
| JPM Asia Growth | Asia Pacific Excluding Japan | GB00B1XMSK57 | Medium risk |
| JPM Japan | Japan | GB00B1XMTP77 | Medium risk |
| Liontrust Global Alpha | Flexible Investment | GB0031190555 | Medium risk |
| T. Rowe Price Global Focused Growth Equity | Global | GB00BD446774 | Medium risk |
| Aubrey Capital Management Ltd Aubrey Global Conviction | Global | GB00B1L8XB18 | High risk |
| AXA Framlington Global Technology | Technology & Telecommunications | GB00B4W52V57 | High risk |
| Baillie Gifford European | Europe Excluding UK | GB0006058258 | High risk |
| Baillie Gifford Long Term Global Growth Investment | Global | GB00BD5Z0Z54 | High risk |
| Baillie Gifford Pacific | Asia Pacific Excluding Japan | GB0006063233 | High risk |
| Baillie Gifford Positive Change | Global | GB00BYVGKV59 | High risk |
| Barings Eastern Trust | Asia Pacific Excluding Japan | GB0000799923 | High risk |
| Invesco Global Focus (UK) | Global | GB00B3KJYG12 | High risk |
| LF Miton UK Smaller Companies | UK Smaller Companies | GB00B818N094 | High risk |
| Threadneedle Global Emerging Market Equity | Global Emerging Markets | GB00B10SJD63 | 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 |
| Allianz Strategic Bond | Sterling Strategic Bond | GB00B06T9362 | Low risk |
| Jupiter Corporate Bond | Sterling Corporate Bond | GB0002691805 | Low risk |
| LF Blue Whale Growth | Global | GB00BD6PG563 | Medium risk |
| LF Canlife Global Macro Bond | Global Bonds | GB00B4LW2X97 | Low risk |
| LF Miton European Opportunities | Europe Excluding UK | GB00BZ2K2M84 | Medium risk |
| Liontrust Sustainable Future Managed Growth | Flexible Investment | GB0030029622 | Medium risk |
| Marlborough Global Bond | Global Bonds | GB0003474730 | Low risk |
| Merian Corporate Bond | Sterling Corporate Bond | GB00B1XG7X39 | Low risk |
| Royal London Sustainable World Trust | Mixed Investment 40-85% Shares | GB00B882H241 | Medium risk |
| Threadneedle Dynamic Real Return | Targeted Absolute Return | GB00B93TQ868 | 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 11% (18%)
- Alternatives 12% (7%) - includes absolute return strategies & some bond exposure
- UK Corporate Fixed Interest (i.e UK bonds) 12% (11%)
- Emerging Market Fixed Income 0% (0%)
- North American Equities 20% (26%)
- European Equities 10% (12%)
- Chinese Equities 7% (0%)
- Japanese Equities 4% (4%)
- Property 0% (0%)
- UK Equities 5% (5%)
- Gilts 4% (0%)
- Cash 0% (4%)
- Emerging market equities 3% (3%)
- Other international equities 0% (0%)
- Asian Equities 12% (10%)
- 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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