80-20 Investor Best of the Best Selection – October 2021 Update

Commentary

Of the 30 funds in September's BOTB, 19 funds have retained their place in October's selection. The chart below shows the performance of the BOTB against a benchmark that is calculated using the respective sector averages for each fund in the BOTB and assuming the same asset mix. The BOTB slightly underperformed after the bond market sell-off sparked a sharp rotation back into reflation trade equity sectors, such as cyclicals and financials.

While in August every single fund within the BOTB selection finished in positive territory, the reverse was almost true for September because as explained in September's newsletter markets universally fell during the month. The table below shows the top performers within the BOTB for the month of September and it's good to see three of those are held within my own £50k portfolio. Clearly, exposure to Indian and Russian equities was a real positive as evidenced by the performance of Liontrust India and Fidelity Emerging Europe Middle East and Africa.

Fund	September % return
Liontrust India	5.14
Invesco High Yield (UK)	0.47
BM Brooks Macdonald Defensive Capital	-0.35
Fidelity Emerging Europe Middle East and Africa	-0.75
Fidelity UK Smaller Companies	-0.86

At the other end of the scale, the worst-performing funds were those with exposure to property or technology shares which fell between 3.5% to 5.5%. This month the BOTB's medium risk funds have had an overhaul and the overall equity exposure has risen slightly from 67% to 68%, which is the highest for some time. The focus of the portfolio remains US, UK and European equities, while having almost no direct exposure to Asian equities (including Japan) but there is new exposure to Russian equities (owing to the rally in commodities). Growth stock exposure remains but the exposure to property equity funds has reduced after their performance moderated as bond yields burst higher. At the low-risk end of the selection, there remains a significant allocation to Targeted Absolute Return funds but a reduced exposure to bond funds, given the latter's lacklustre performance after bond prices tumbled in September. Once again there is an increased exposure to mixed-asset funds which account for the BOTB's overall increased equity exposure.

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 seven years ago.

Below I list this month's selection in full with the 19 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.

October'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
ASI Global Smaller Companies	Global	GB00B7KVX245	Medium risk
ASI UK Smaller Companies	UK Smaller Companies	GB00B7FBH943	Medium risk
AXA Framlington American Growth	North America	GB00B5LXGG05	Medium risk
Baillie Gifford Diversified Growth	Targeted Absolute Return	GB00B3FD0Z91	Low risk
Baillie Gifford Multi Asset Growth	Targeted Absolute Return	GB00BY9C5Y31	Low risk
BM Brooks Macdonald Defensive Capital	Targeted Absolute Return	GB00B61MR835	Low risk
CFP Castlefield Real Return	Targeted Absolute Return	GB00B12V1482	Low risk
Fidelity Emerging Europe Middle East and Africa	Specialist	GB00B87Z7808	High risk
Fidelity UK Smaller Companies	UK Smaller Companies	GB00B7VNMB18	High risk
FTF Franklin UK Smaller Companies	UK Smaller Companies	GB00B7FFF708	High risk
Invesco High Yield (UK)	Sterling High Yield	GB00B3RW7649	Low risk
Invesco Monthly Income Plus (UK)	Sterling Strategic Bond	GB00B1W7J204	Low risk
Jupiter European	Europe Excluding UK	GB0006664683	Medium risk
Liontrust Global Technology	Technology & Telecommunication	GB00BYXZ5N79	High risk
Liontrust India	India/Indian Subcontinent	GB00B1L6DV51	High risk
Liontrust Russia	Specialist	GB00B86WB793	High risk
Liontrust Sustainable Future Defensive Managed	Mixed Investment 20-60% Shares	GB00BMN90635	Low risk
Marlborough European Multi-Cap	Europe Excluding UK	GB0001719730	High risk
Marlborough UK Micro Cap Growth	UK Smaller Companies	GB00B02TPH60	High risk
MI Chelverton UK Equity Growth	UK All Companies	GB00BP855B75	Medium risk
Ninety One American Franchise	North America	GB00B1XFJ342	High risk
Premier Miton Diversified Cautious Growth	Mixed Investment 20-60% Shares	GB00BHNZ2P92	Low risk
Royal London Global Sustainable Equity	Global	GB00BL6V0581	Medium risk
Royal London Sustainable Managed Growth Trust	Mixed Investment 0-35% Shares	GB00B8H7XS88	Low risk
Schroder Global Cities Real Estate	Property Other	GB00B1VPTY75	Medium risk
SVS Sanlam North American Equity	North America	GB0007655698	Medium risk
T. Rowe Price Global Technology Equity	Technology & Telecommunication	GB00BD446K01	High risk
Troy Asset Management Ltd Trojan Global Equity	Global	GB00B0ZJ5S47	Medium risk
VT Chelsea Managed Monthly Income	Mixed Investment 20-60% Shares	GB00BF0NMS52	Low risk
VT Downing Monthly Income	UK Equity Income	GB00B61JRG28	Medium risk

October's Best of the Best Selection - (grouped by risk)

Here is October'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
Baillie Gifford Diversified Growth	Targeted Absolute Return	GB00B3FD0Z91	Low risk
Baillie Gifford Multi Asset Growth	Targeted Absolute Return	GB00BY9C5Y31	Low risk
BM Brooks Macdonald Defensive Capital	Targeted Absolute Return	GB00B61MR835	Low risk
CFP Castlefield Real Return	Targeted Absolute Return	GB00B12V1482	Low risk
Invesco High Yield (UK)	Sterling High Yield	GB00B3RW7649	Low risk
Invesco Monthly Income Plus (UK)	Sterling Strategic Bond	GB00B1W7J204	Low risk
Liontrust Sustainable Future Defensive Managed	Mixed Investment 20-60% Shares	GB00BMN90635	Low risk
Premier Miton Diversified Cautious Growth	Mixed Investment 20-60% Shares	GB00BHNZ2P92	Low risk
Royal London Sustainable Managed Growth Trust	Mixed Investment 0-35% Shares	GB00B8H7XS88	Low risk
VT Chelsea Managed Monthly Income	Mixed Investment 20-60% Shares	GB00BF0NMS52	Low risk
ASI Global Smaller Companies	Global	GB00B7KVX245	Medium risk
ASI UK Smaller Companies	UK Smaller Companies	GB00B7FBH943	Medium risk
AXA Framlington American Growth	North America	GB00B5LXGG05	Medium risk
Jupiter European	Europe Excluding UK	GB0006664683	Medium risk
MI Chelverton UK Equity Growth	UK All Companies	GB00BP855B75	Medium risk
Royal London Global Sustainable Equity	Global	GB00BL6V0581	Medium risk
Schroder Global Cities Real Estate	Property Other	GB00B1VPTY75	Medium risk
SVS Sanlam North American Equity	North America	GB0007655698	Medium risk
Troy Asset Management Ltd Trojan Global Equity	Global	GB00B0ZJ5S47	Medium risk
VT Downing Monthly Income	UK Equity Income	GB00B61JRG28	Medium risk
Fidelity Emerging Europe Middle East and Africa	Specialist	GB00B87Z7808	High risk
Fidelity UK Smaller Companies	UK Smaller Companies	GB00B7VNMB18	High risk
FTF Franklin UK Smaller Companies	UK Smaller Companies	GB00B7FFF708	High risk
Liontrust Global Technology	Technology & Telecommunication	GB00BYXZ5N79	High risk
Liontrust India	India/Indian Subcontinent	GB00B1L6DV51	High risk
Liontrust Russia	Specialist	GB00B86WB793	High risk
Marlborough European Multi-Cap	Europe Excluding UK	GB0001719730	High risk
Marlborough UK Micro Cap Growth	UK Smaller Companies	GB00B02TPH60	High risk
Ninety One American Franchise	North America	GB00B1XFJ342	High risk
T. Rowe Price Global Technology Equity	Technology & Telecommunication	GB00BD446K01	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 Continental European	Europe Excluding UK	GB00B3Q8YX99	High risk
ASI UK Real Estate Share	Property Other	GB00B0XWNM59	High risk
AXA Global Distribution	Mixed Investment 20-60% Shares	GB0008309063	Low risk
BMO North American Equity	North America	GB0030281405	Medium risk
Fidelity Global Property	Property Other	GB00B7K2NZ09	Medium risk
Liontrust Sustainable Future Managed	Mixed Investment 40-85% Shares	GB0030030398	Medium risk
Marlborough Multi-Cap Growth	UK All Companies	GB0005662787	Medium risk
Royal London Global Index Linked	Global Bonds	GB00B772RM82	Low risk
Royal London Sustainable World Trust	Mixed Investment 40-85% Shares	GB00B882H241	Medium risk
Schroder UK Dynamic Smaller Companies	UK Smaller Companies	GB0007220360	High risk
TB Saracen Global Income & Growth	Global Equity Income	GB00B5B35X02	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 9% (10%)
• Alternatives 18% (19%) - includes absolute return strategies & some bond exposure
• UK Corporate Fixed Interest (i.e UK bonds) 5% (4%)
• Emerging Market Fixed Income 0% (0%)
• North American Equities 20% (17%)
• European Equities 6% (7%)
• Chinese Equities 0% (0%)
• Japanese Equities 0% (0%)
• Property 5% (8%)
• UK Equities 19% (21%)
• Gilts 0% (0%)
• Cash 0% (0%)
• Asian / Emerging market equities 7% (3%)
• Other international equities 11% (11%)
• 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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