Commentary
18 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. If you look at the latest heatmap Chinese equities once again performed strongly as the weak dollar continues to boost returns. Despite August's volatility caused by geopolitical tensions the BOTB made an average of 1.87% during August versus 1% for the average professionally managed fund within the Mixed Investment 40-85% Shares sector.
Japanese equities have once again slipped out of the selection as a strong yen hampered the domestic stock market. UK equities are the chief beneficiary after a strong summer performance. In addition the few funds with hedged currency exposure failed to make an impact on the BOTB, slipping out of the selection as a weak pound boosted unhedged funds.
Despite the increased volatility in equity markets there are no noticeable movers between risk levels. The only exception is the inclusion of Cavendish Aim (a previous regular in the BOTB) in the medium risk section. Most UK Smaller Companies funds reside in the high risk category. The BOTB asset mix continues to be diversified despite the removal of Japanese equities with the medium risk portion of the selection now dominated by funds with direct equity exposure, as opposed to managed multi-asset funds. In terms of direct equity exposure the portfolio's exposure is slightly up on last month and 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 18 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.
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)
| Name | Sector | ISIN Code | Risk |
| Aberdeen - Emerging Markets Bond | Global Emerging Markets Bond | GB00B5L9HN22 | Medium risk |
| Allianz - Total Return Asian Equity | Asia Pacific Excluding Japan | GB00B1FRQV53 | High risk |
| Artemis - High Income | Sterling Strategic Bond | GB00B2PLJN71 | Low risk |
| Baillie Gifford - American | North America | GB0006061963 | Medium risk |
| Baillie Gifford - Emerging Markets Growth | Global Emerging Markets | GB0006020647 | High risk |
| Baillie Gifford - Global Select | Global | GB00BYNK7G95 | Medium risk |
| Baillie Gifford - Greater China | China/Greater China | GB00B39RMM81 | High risk |
| Barclays - High Income Portfolio | Mixed Investment 0-35% Shares | GB00B68F5S16 | Low risk |
| Barclays - Income Plus Portfolio | Mixed Investment 0-35% Shares | GB00B6WYG696 | Low risk |
| Baring - Eastern Trust | Asia Pacific Excluding Japan | GB0000799923 | High risk |
| CF - Miton European Opportunities | Europe Excluding UK | GB00BZ2K2M84 | High risk |
| CF - Seneca Diversified Income | Mixed Investment 20-60% Shares | GB00B7JTF560 | Low risk |
| Consistent - Practical Investment | Mixed Investment 40-85% Shares | GB0006982671 | Low risk |
| EdenTree - Amity Sterling Bond | Sterling Strategic Bond | GB00B2PF8D20 | Low risk |
| F&C - Property Growth and Income | Property | GB00BQWJ8687 | Medium risk |
| FP - Octopus UK Micro Cap Growth | UK Smaller Companies | GB00BYQ7HN43 | High risk |
| Henderson - China Opportunities | China/Greater China | GB0031860934 | High risk |
| JPM - Global Macro Balanced | Mixed Investment 0-35% Shares | GB00B09RGK38 | Low risk |
| Jupiter - European | Europe Excluding UK | GB0006664683 | High risk |
| Legg Mason - IF ClearBridge Global Equity Income | Global Equity Income | GB00B2R8FL62 | Medium risk |
| Liontrust - Sustainable Future Defensive Managed | Mixed Investment 20-60% Shares | GB00BMN90635 | Low risk |
| M&G - Fund of Investment Trust Shares | Global | GB0031288680 | Medium risk |
| Man GLG - Strategic Bond | Sterling Strategic Bond | GB00B731HR48 | Low risk |
| Man GLG - UK Income | UK Equity Income | GB00B0117B11 | Medium risk |
| Old Mutual - UK Mid Cap | UK All Companies | GB00B1XG8963 | Medium risk |
| Old Mutual - UK Smaller Companies | UK Smaller Companies | GB00B1XG8B83 | High risk |
| Premier - Diversified | Mixed Investment 40-85% Shares | GB00B8BJV423 | Low risk |
| Smith & Williamson - European Equity | Europe Excluding UK | GB0008192840 | High risk |
| TM - Cavendish AIM | UK Smaller Companies | GB00B0JX3X39 | Medium risk |
| UBS - US Growth | North America | GB00B7VHZX64 | Medium 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):
| Name | Sector | ISIN Code | Risk |
| Artemis - High Income | Sterling Strategic Bond | GB00B2PLJN71 | Low risk |
| Barclays - High Income Portfolio | Mixed Investment 0-35% Shares | GB00B68F5S16 | Low risk |
| Barclays - Income Plus Portfolio | Mixed Investment 0-35% Shares | GB00B6WYG696 | Low risk |
| CF - Seneca Diversified Income | Mixed Investment 20-60% Shares | GB00B7JTF560 | Low risk |
| Consistent - Practical Investment | Mixed Investment 40-85% Shares | GB0006982671 | Low risk |
| EdenTree - Amity Sterling Bond | Sterling Strategic Bond | GB00B2PF8D20 | Low risk |
| JPM - Global Macro Balanced | Mixed Investment 0-35% Shares | GB00B09RGK38 | Low risk |
| Liontrust - Sustainable Future Defensive Managed | Mixed Investment 20-60% Shares | GB00BMN90635 | Low risk |
| Man GLG - Strategic Bond | Sterling Strategic Bond | GB00B731HR48 | Low risk |
| Premier - Diversified | Mixed Investment 40-85% Shares | GB00B8BJV423 | Low risk |
| Aberdeen - Emerging Markets Bond | Global Emerging Markets Bond | GB00B5L9HN22 | Medium risk |
| Baillie Gifford - American | North America | GB0006061963 | Medium risk |
| Baillie Gifford - Global Select | Global | GB00BYNK7G95 | Medium risk |
| F&C - Property Growth and Income | Property | GB00BQWJ8687 | Medium risk |
| Legg Mason - IF ClearBridge Global Equity Income | Global Equity Income | GB00B2R8FL62 | Medium risk |
| M&G - Fund of Investment Trust Shares | Global | GB0031288680 | Medium risk |
| Man GLG - UK Income | UK Equity Income | GB00B0117B11 | Medium risk |
| Old Mutual - UK Mid Cap | UK All Companies | GB00B1XG8963 | Medium risk |
| TM - Cavendish AIM | UK Smaller Companies | GB00B0JX3X39 | Medium risk |
| UBS - US Growth | North America | GB00B7VHZX64 | Medium risk |
| Allianz - Total Return Asian Equity | Asia Pacific Excluding Japan | GB00B1FRQV53 | High risk |
| Baillie Gifford - Emerging Markets Growth | Global Emerging Markets | GB0006020647 | High risk |
| Baillie Gifford - Greater China | China/Greater China | GB00B39RMM81 | High risk |
| Baring - Eastern Trust | Asia Pacific Excluding Japan | GB0000799923 | High risk |
| CF - Miton European Opportunities | Europe Excluding UK | GB00BZ2K2M84 | High risk |
| FP - Octopus UK Micro Cap Growth | UK Smaller Companies | GB00BYQ7HN43 | High risk |
| Henderson - China Opportunities | China/Greater China | GB0031860934 | High risk |
| Jupiter - European | Europe Excluding UK | GB0006664683 | High risk |
| Old Mutual - UK Smaller Companies | UK Smaller Companies | GB00B1XG8B83 | High risk |
| Smith & Williamson - European Equity | Europe Excluding UK | GB0008192840 | 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 |
| AXA - Framlington American Growth | North America | GB00B5LXGG05 | Medium risk |
| AXA - Framlington UK Smaller Cos | UK Smaller Companies | GB00B7MMLM18 | High risk |
| Baillie Gifford - Corporate Bond | Sterling Strategic Bond | GB0005947741 | Low risk |
| Fidelity - China Consumer | China/Greater China | GB00B82ZSC67 | High risk |
| Henderson - Fixed Interest Monthly Income | Sterling Strategic Bond | GB0001920486 | Low risk |
| Marlborough - European Multi-Cap | Europe Excluding UK | GB0001719730 | High risk |
| Neptune - Japan Opportunities | Japan | GB00B3Z0Y815 | Medium risk |
| Newton - Global Emerging Markets | Global Emerging Markets | GB00BVB2Q700 | High risk |
| Old Mutual - Asia Pacific | Asia Pacific Excluding Japan | GB00B1XG8C90 | High risk |
| S&W - Saltus Wealth | Targeted Absolute Return | GB00B6RLZP73 | Low risk |
| Schroder - UK Dynamic Absolute Return | Targeted Absolute Return | GB00B3N74T57 | Low risk |
| Wise Funds Limited - TB Wise Investment | Flexible Investment | GB0034272533 | 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 14% (16%)
- Alternatives 11% (17%) - includes absolute return strategies & property
- UK Corporate Fixed Interest (i.e UK bonds) 3% (0%)
- Emerging Market Fixed Interest 3% (3%)
- North American Equities 10% (10%)
- European Equities 11% (7%)
- Japanese Equities 0% (4%)
- Property 0% (0%)
- UK Equities 23% (19%)
- Cash 4% (4%)
- Asian equities 3% (7%)
- Asia Pacific Emerging equities 14% (13%)
- Other international equities 4% (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 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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