80-20 Investor Best of the Best Selection – November 2020 Update

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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