80-20 Investor Best of the Best Selection - September 2015 Update

A total of 10 funds from August make it into September's selection, which is just less than half of them. Below I list this month's selection in full with the 13 funds that regained their place in black while the new additions are in green.

Just as last time, I have included the full list sorted alphabetically by name and then by risk category.

September'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)

Fund name	Sector	ISIN Code	Risk level
Aberdeen - European High Yield Bond	Sterling High Yield	GB00B5968F40	Low risk
Argonaut - FP Argonaut European Alpha	Europe Excluding UK	GB00B4ZRCD05	High risk
Artemis - Pan-European Absolute Return	Targeted Absolute Return	GB00BMMV4J16	Medium risk
Aviva Inv - European Equity	Europe Excluding UK	GB0032494246	High risk
AXA - Framlington UK Smaller Cos	UK Smaller Companies	GB0030310857	Medium risk
BlackRock - European Absolute Alpha	Targeted Absolute Return	GB00B4Y62T40	Low risk
BlackRock - UK Absolute Alpha	Targeted Absolute Return	GB00B06L9G55	Medium risk
CF - Miton UK Value Opportunities	UK All Companies	GB00B8KV0M06	Medium risk
Fidelity - Japan Smaller Companies	Japan	GB0003860565	High risk
FP - Miton Undervalued Assets	UK All Companies	GB00B3BSKG91	Medium risk
Invesco Perpetual - European Opportunities	Europe Excluding UK	GB00B28J0N53	High risk
Kames - UK Smaller Companies	UK Smaller Companies	GB00B142FH03	Medium risk
L&G - Dynamic Bond	Sterling Strategic Bond	GB00B1TWMW95	Low risk
Man GLG - Continental Europe	Europe Excluding UK	GB00B0119370	High risk
Marlborough - High Yield Fixed Interest	Sterling High Yield	GB00B03TN153	Low risk
Old Mutual - UK Mid Cap	UK All Companies	GB00B1XG7999	Medium risk
Premier - Global Alpha Growth	Global	GB00B2QXTP49	High risk
Schroder - Absolute UK Dynamic	Targeted Absolute Return	GB00B3N74T57	Medium risk
Schroder - Monthly High Income	Sterling High Yield	GB0009505693	Low risk
Schroder - Strategic Credit	Sterling Strategic Bond	GB00B11DNZ00	Low risk
Schroder - UK Dynamic Smaller Companies	UK Smaller Companies	GB0031092942	Medium risk
Schroder - UK Smaller Companies	UK Smaller Companies	GB0007649535	Medium risk
Standard Life Investments - Ignis High Income Bond	Sterling High Yield	GB0009515957	Low risk

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

Here is September's shortlist grouped by their risk category (funds unchanged from last month are in black while new additions are in green):

Fund name	Sector	ISIN Code	Risk Level
Aberdeen - European High Yield Bond	Sterling High Yield	GB00B5968F40	Low risk
BlackRock - European Absolute Alpha	Targeted Absolute Return	GB00B4Y62T40	Low risk
L&G - Dynamic Bond	Sterling Strategic Bond	GB00B1TWMW95	Low risk
Marlborough - High Yield Fixed Interest	Sterling High Yield	GB00B03TN153	Low risk
Schroder - Monthly High Income	Sterling High Yield	GB0009505693	Low risk
Schroder - Strategic Credit	Sterling Strategic Bond	GB00B11DNZ00	Low risk
Standard Life Investments - Ignis High Income Bond	Sterling High Yield	GB0009515957	Low risk
Artemis - Pan-European Absolute Return	Targeted Absolute Return	GB00BMMV4J16	Medium risk
AXA - Framlington UK Smaller Cos	UK Smaller Companies	GB0030310857	Medium risk
BlackRock - UK Absolute Alpha	Targeted Absolute Return	GB00B06L9G55	Medium risk
CF - Miton UK Value Opportunities	UK All Companies	GB00B8KV0M06	Medium risk
FP - Miton Undervalued Assets	UK All Companies	GB00B3BSKG91	Medium risk
Kames - UK Smaller Companies	UK Smaller Companies	GB00B142FH03	Medium risk
Old Mutual - UK Mid Cap	UK All Companies	GB00B1XG7999	Medium risk
Schroder - Absolute UK Dynamic	Targeted Absolute Return	GB00B3N74T57	Medium risk
Schroder - UK Dynamic Smaller Companies	UK Smaller Companies	GB0031092942	Medium risk
Schroder - UK Smaller Companies	UK Smaller Companies	GB0007649535	Medium risk
Argonaut - FP Argonaut European Alpha	Europe Excluding UK	GB00B4ZRCD05	High risk
Aviva Inv - European Equity	Europe Excluding UK	GB0032494246	High risk
Fidelity - Japan Smaller Companies	Japan	GB0003860565	High risk
Invesco Perpetual - European Opportunities	Europe Excluding UK	GB00B28J0N53	High risk
Man GLG - Continental Europe	Europe Excluding UK	GB00B0119370	High risk
Premier - Global Alpha Growth	Global	GB00B2QXTP49	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 Best of the Best list are listed below. Many of them remain in the Best funds by Sector selection:

Fund name	Sector	ISIN Code	Risk level
Aberdeen - High Yield Bond	Sterling High Yield	GB00B5968F40	Low risk
Aberdeen - Property Share	Property	GB00B0XWNM59	High risk
Argonaut - FP Argonaut European Enhanced Income	Europe Excluding UK	GB00B7M3XX95	Medium risk
AXA - Framlington American Growth	North America	GB0003509212	High risk
AXA - Framlington Global Technology	Technology & Telecom	GB0006598998	High risk
Cavendish - Technology	Technology & Telecom	GB00B60SMN24	High risk
FP - Apollo Multi Asset Balanced	Mixed Investment 20%-60% Shares	GB00B3FPF276	Low risk
GLG - Technology Equity	Technology & Telecom	GB00B0119H13	High risk
Henderson - Japan Opportunities	Japan	GB0007683203	High risk
JPM - Cautious Managed	Mixed Investment 0%-35% Shares	GB00B09RGK38	Low risk
Marlborough - Multi Cap Income	UK Equity Income	GB00B5L8VH15	Medium risk
Natixis - Loomis Sayles U.S. Equity Leaders	North America	GB00B8L3WZ29	High risk
Old Mutual - Bond 1	Sterling Strategic Bond	GB0033476184	Low risk
PFS - Chelverton UK Equity Income	UK Equity Income	GB00B1FD6244	Medium risk
PFS - TwentyFour Dynamic Bond	Sterling Strategic Bond	GB00B566LX69	Low risk
SF - Metropolis Value	Flexible Investment	GB00B3LDLX86	Medium risk
SJP - International Corporate Bond	Global Bonds	GB00B62VYF56	Low risk
Unicorn - UK Income	UK Equity Income	GB00B00Z1S94	Medium risk

Commentary

Well August was an incredible month in investing. Equity markets tumbled worldwide (due to concerns over China's economy) with most markets down around 10% or more before recovering slightly. Despite this the 80-20 Investor Best of the Best Selection managed to extend its outperformance over the market and fund managers. Part of the reason was that the selection had no exposure to emerging markets, Asia (excluding Japan) or China. In addition there was a move towards more defensive funds. That remains the case this month.

This month the portfolio has become more concentrated with 23 funds. The equity part of the portfolio now has a UK Smaller companies and European focus. Interestingly last month US equities and technology stocks entered the Best of the Best Selection but this month they narrowly missed out.

The noticeable feature is that a number of absolute return funds which use alternative strategies have entered the selection. It is the first time that so many absolute return funds have made the grade. There is certainly a reduction in risk when you look at the Best of the Best Selection this month, emphasised by the fact that there are only 6 high risk funds (usually there are up to 10).

Previously I've explained that our risk ratings take into account how funds are behaving in the current market conditions. With the market sell-off being sparked by concerns that Chinese economic growth is faltering european equities (particularly in Germany which exports to China) have been especially volatile. Therefore it comes as no surprise that the European equity funds are now classed as high risk plays.

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:

UK Equities 30% (22%)
Global Fixed Interest 13% (15%)
Alternative strategies 13% (0%)
European Equities 12% (11%)
UK Corporate Fixed Interest (i.e UK bonds) 11% (9%)
Japanese Equities 5% (3%)
North American Equities 3% (14%)

The remainder is made up of other international equities.

80-20 Investor Best of the Best fund performance – since inception August 2014

The 80-20 Investor Best of the Best fund selection is over a year old. As you know we've been tracking the Best of the Best Selection of funds, as picked by our unique algorithm, since August 2014. The chart below shows how someone who had bought the Best of the Best Selection each month would have fared (in green) versus the average managed fund (black) and the FTSE 100 (red). What is particularly pleasing is that the 80-20 Investor Best of the Best Selection outperformed even during the recent market sell-off.