80-20 Investor Best of the Best Selection – September 2019 Update

Commentary

As explained in the latest monthly newsletter and my latest portfolio update, the big winners in August were those funds benefiting from a macro theme of slowing global economic growth (with a possible future recession) as the ongoing US-China trade war, global geopolitical concerns and Brexit began to bite.

If you look at the performance of funds from August’s BOTB the winners were those funds with significant exposure to fixed interest such as BNY Mellon International Bond Sterling (+3.09% in August), Janus Henderson Fixed Interest Monthly Income (+2.21%) and Vanguard LifeStrategy 20% Equity (+1.75%). At the opposite end of the spectrum tech funds struggled with Neptune Global Technology falling 4.68%.

Overall, the average return for the BOTB was -0.55%, which compares favourably against the average return of -2% for funds within the Mixed Investment 40-85% Shares sector.

August ended up playing out in much the same way as May did, with defensive equity sectors and assets outperforming. Unsurprisingly those funds with these characteristics retained their place in September’s BOTB and we see an increased presence of income funds this time around. In addition, September sees the return of those funds with exposure to REITs and utilities (such as Fidelity Global Property and M&G Global Listed Infrastructure) which performed well in August and May.

Once again, gilts return to the BOTB after a brief omission following increased Brexit angst driving up demand for fixed income assets. The prospect of a no-deal Brexit also continued to push the pound lower, giving a continued boost to overseas assets. That helps explain why the BOTB now has an unusually high number (7) of global funds. Notably, the BOTB still has no exposure to emerging market equities or Asian equities.

Overall 15 funds retain their place in this month's BOTB, while the equity content drops slightly from 59% to 57%.

At the foot of this article you can see how the 80-20 Investor selection has outperformed the professional fund managers as well as the market since its launch five years ago.

Below I list this month's selection in full with the 15 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
Allianz Gilt Yield	UK Gilts	GB0031383283	Low risk
Artemis US Select	North America	GB00BMMV5105	High risk
ASI Emerging Market Debt	Global Emerging Markets Bond	GB00B8K56P77	Low risk
ASI Europe ex UK Equity	Europe Excluding UK	GB00B0LG6P37	High risk
ASI Global Unconstrained Equity	Global	GB00B6915J97	High risk
AXA Sterling Index Linked Bond	UK Index Linked Gilts	GB00B02Y6B22	Medium risk
BNY Mellon International Bond	Global Bonds	GB0006779655	Low risk
BNY Mellon Real Return	Targeted Absolute Return Retail	GB0001642635	Low risk
Carvetian Electric & General Investment	Global	GB00B52CBS38	Medium risk
Fidelity Global Enhanced Income	Global Equity Income	GB00BD1NLJ41	Medium risk
Fidelity Global Property	Property Other	GB00B7K2NZ09	High risk
Fidelity Multi Asset Allocator Defensive	Mixed Investment 0-35% Shares	GB00B8YQD220	Low risk
First State Global Listed Infrastructure	Global	GB00B24HJL45	Medium risk
Fundsmith Equity	Global	GB00B4Q5X527	High risk
Janus Henderson Fixed Interest Monthly Income	Sterling Strategic Bond	GB0001920486	Low risk
Legg Mason IF Martin Currie North American	North America	GB00BVZ6VD94	High risk
LF Canlife Global Macro Bond	Global Bonds	GB00B4LW2X97	Low risk
LF Miton European Opportunities	Europe Excluding UK	GB00BZ2K2M84	High risk
LF Miton Global Infrastructure Income	Global Equity Income	GB00BD3H9L21	Medium risk
M&G Global Listed Infrastructure	Global	GB00BF00R928	Medium risk
Marlborough US Multi-Cap Income	North America	GB0001722882	High risk
Morgan Stanley Global Brands	Global	GB0032482498	High risk
Royal London Index Linked	UK Index Linked Gilts	GB00B8DDWW71	Medium risk
Schroder Global Cities Real Estate	Property Other	GB00B1VPTY75	High risk
TB Evenlode Global Income	Global Equity Income	GB00BF1QMV61	Medium risk
TB Evenlode Income	UK All Companies	GB00BD0B7D55	Medium risk
Threadneedle Emerging Market Bond	Global Emerging Markets Bond	GB0002365608	Low risk
Threadneedle European Bond	Global Bonds	GB0002702909	Low risk
Troy Asset Management Ltd Trojan Global Equity	Global	GB00B0ZJ5S47	Medium risk
Vanguard LifeStrategy 20% Equity	Mixed Investment 0-35% Shares	GB00B4NXY349	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):

Name	Sector	ISIN Code	Risk
Allianz Gilt Yield	UK Gilts	GB0031383283	Low risk
ASI Emerging Market Debt	Global Emerging Markets Bond	GB00B8K56P77	Low risk
BNY Mellon International Bond	Global Bonds	GB0006779655	Low risk
BNY Mellon Real Return	Targeted Absolute Return Retail	GB0001642635	Low risk
Fidelity Multi Asset Allocator Defensive	Mixed Investment 0-35% Shares	GB00B8YQD220	Low risk
Janus Henderson Fixed Interest Monthly Income	Sterling Strategic Bond	GB0001920486	Low risk
LF Canlife Global Macro Bond	Global Bonds	GB00B4LW2X97	Low risk
Threadneedle Emerging Market Bond	Global Emerging Markets Bond	GB0002365608	Low risk
Threadneedle European Bond	Global Bonds	GB0002702909	Low risk
Vanguard LifeStrategy 20% Equity	Mixed Investment 0-35% Shares	GB00B4NXY349	Low risk
AXA Sterling Index Linked Bond	UK Index Linked Gilts	GB00B02Y6B22	Medium risk
Carvetian Electric & General Investment	Global	GB00B52CBS38	Medium risk
Fidelity Global Enhanced Income	Global Equity Income	GB00BD1NLJ41	Medium risk
First State Global Listed Infrastructure	Global	GB00B24HJL45	Medium risk
LF Miton Global Infrastructure Income	Global Equity Income	GB00BD3H9L21	Medium risk
M&G Global Listed Infrastructure	Global	GB00BF00R928	Medium risk
Royal London Index Linked	UK Index Linked Gilts	GB00B8DDWW71	Medium risk
TB Evenlode Global Income	Global Equity Income	GB00BF1QMV61	Medium risk
TB Evenlode Income	UK All Companies	GB00BD0B7D55	Medium risk
Troy Asset Management Ltd Trojan Global Equity	Global	GB00B0ZJ5S47	Medium risk
Artemis US Select	North America	GB00BMMV5105	High risk
ASI Europe ex UK Equity	Europe Excluding UK	GB00B0LG6P37	High risk
ASI Global Unconstrained Equity	Global	GB00B6915J97	High risk
Fidelity Global Property	Property Other	GB00B7K2NZ09	High risk
Fundsmith Equity	Global	GB00B4Q5X527	High risk
Legg Mason IF Martin Currie North American	North America	GB00BVZ6VD94	High risk
LF Miton European Opportunities	Europe Excluding UK	GB00BZ2K2M84	High risk
Marlborough US Multi-Cap Income	North America	GB0001722882	High risk
Morgan Stanley Global Brands	Global	GB0032482498	High risk
Schroder Global Cities Real Estate	Property Other	GB00B1VPTY75	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
Aberdeen Emerging Markets Bond	Global Emerging Markets Bond	GB00B5L9HN22	Low risk
Aberdeen UK Equity Income	UK Equity Income	GB00B0XWN929	Medium risk
AXA Framlington Global Technology	Technology & Telecommunications	GB0006598998	High risk
Baillie Gifford Strategic Bond	Sterling Strategic Bond	GB0005947741	Low risk
BNY Mellon Multi-Asset Balanced	Mixed Investment 40-85% Shares	GB0006778574	Medium risk
Fidelity Global Dividend	Global Equity Income	GB00B7778087	Medium risk
LF Blue Whale Growth	Global	GB00BD6PG563	High risk
Liontrust Sustainable Future Defensive Managed	Mixed Investment 20-60% Shares	GB00BMN90635	Low risk
MI Chelverton UK Equity Growth	UK All Companies	GB00BP855B75	Medium risk
Neptune Global Technology	Technology & Telecommunications	GB00BYXZ5N79	High risk
Royal London Sustainable Managed Growth Trust	Mixed Investment 0-35% Shares	GB00B8H7XS88	Low risk
Smith & Williamson North American Equity	North America	GB0007655698	High risk
Thesis Climate Assets	Mixed Investment 40-85% Shares	GB00B3K3HX15	Medium risk
Threadneedle Managed Bond	Mixed Investment 0-35% Shares	GB0032010042	Low risk
Troy Asset Management Ltd Trojan Global Income	Global Equity Income	GB00BD82KP33	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% (11%)
• Alternatives 9% (10%) - includes absolute return strategies & some bond exposure
• UK Corporate Fixed Interest (i.e UK bonds) 0% (5%)
• Emerging Market Fixed Income 6% (10%)
• North American Equities 23% (23%)
• European Equities 12% (12%)
• Japanese Equities 0% (0%)
• Property 7% (0%)
• UK Equities 8% (11%)
• Gilts 10% (0%)
• Cash 4% (5%)
• Emerging market equities 0% (0%)
• Other international equities 7% (13%)
• Asian Equities 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 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.

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