Commentary
18 funds from August's BOTB retain their place in September's shortlist. The average return from the BOTB for the month of August was 1.4% which again is a good return when you consider that the portfolio only had 48% exposure to equities. Comparable professionally managed funds on average returned between 1.22% and 2.38% as shown in the chart below. As I pointed out previously, comparing against the Mixed Investment 40-85% Shares sector average is not a fair comparison for the BOTB given that most funds within the aforementioned sector have up to 85% exposure to equities. But it once again demonstrates that in a month when equity markets rallied strongly you would therefore have expected the sector average for the Mixed Investment 40-85% Shares sector to significantly outperform the BOTB, which it didn't.
The table below shows the top 7 performers from August's BOTB and once again there are some familiar names, which produced staggering returns. Interestingly, I actually hold five of the seven in my own £50k portfolio. The top fund performing fund from Baillie Gifford benefits from exposure to technology stocks but it is also interesting to see Asian equities performing strongly, as well as UK Smaller Companies.
| Name | August % performance |
| Baillie Gifford Long Term Global Growth Investment | 10.02 |
| Baillie Gifford Pacific | 8.26 |
| LF Miton UK Smaller Companies | 7.45 |
| Baillie Gifford Positive Change | 6.91 |
| Allianz Total Return Asian Equity | 5.13 |
| Baillie Gifford Managed | 4.49 |
| Baillie Gifford European | 4.48 |
At the other end of the spectrum, the monthly performance from funds with exposure to UK gilts or corporate bonds was poor with the Royal London UK Government bond fund, which I also personally hold, down over 3.3%. It's therefore not surprising that in the face of the seemingly relentless rise in equities and the short term weakness in bonds that the BOTB's equity exposure has increased to 62%, up from 48%. Most of that increased equity exposure comes via European and Asian/Chinese equities (benefiting from a weak dollar) as well as a small increase in US equities. This is the highest total equity exposure that the BOTB selection has had since before COVID-19. It will be interesting to see if this is rewarded.
UK equities continue to remain almost absent from the BOTB selection which is a reflection of the fact that the UK stock market continues to lag its peers. In fact, the FTSE 100 remains in a bear market, not helped by the weak dollar versus the pound. Any exposure to UK equities is currently via smaller companies. In terms of low-risk funds, the new BOTB has introduced some hedged global bond exposure, to counter the impact of the falling dollar, as well as targeted absolute return funds in place of gilt 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 six 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 |
| Allianz Strategic Bond | Sterling Strategic Bond | GB00B06T9362 | Low risk |
| Allianz Total Return Asian Equity | Asia Pacific Excluding Japan | GB00B1FRQV53 | 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 Managed | Mixed Investment 40-85% Shares | GB0006010168 | Medium risk |
| Baillie Gifford Pacific | Asia Pacific Excluding Japan | GB0006063233 | High risk |
| Baillie Gifford Positive Change | Global | GB00BYVGKV59 | High risk |
| BlackRock European Absolute Alpha | Targeted Absolute Return | GB00B4Y62W78 | Low risk |
| BMO Global Total Return Bond (GBP Hedged) | Global Bonds | GB0033145268 | Low risk |
| Fidelity China Consumer | China/Greater China | GB00B82ZSC67 | Medium risk |
| Invesco China Equity (UK) | China/Greater China | GB00B3RW8C79 | High risk |
| Invesco Global Focus (UK) | Global | GB00B3KJYG12 | High risk |
| JPM Global Ex UK Bond | Global Bonds | GB0030877210 | Low risk |
| JPM Japan | Japan | GB00B1XMTP77 | Medium 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 Defensive Multi Asset | Mixed Investment 0-35% Shares | GB00B0525B66 | Low risk |
| LF Miton European Opportunities | Europe Excluding UK | GB00BZ2K2M84 | Medium risk |
| LF Miton UK Smaller Companies | UK Smaller Companies | GB00B818N094 | High risk |
| Liontrust Global Alpha | Flexible Investment | GB0031190555 | Medium risk |
| Merian Global Strategic Bond | Sterling Strategic Bond | GB00B1XG7L17 | Low risk |
| Morgan Stanley US Advantage | North America | GB00BZ4CG750 | High risk |
| Royal London Sustainable World Trust | Mixed Investment 40-85% Shares | GB00B882H241 | Medium risk |
| T. Rowe Price Dynamic Global Bond | Global Bonds | GB00BD0NLR34 | Low risk |
| T. Rowe Price Global Focused Growth Equity | Global | GB00BD446774 | Medium risk |
| Threadneedle Dynamic Real Return | Targeted Absolute Return | GB00B93TQ868 | Low 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 |
| Allianz Strategic Bond | Sterling Strategic Bond | GB00B06T9362 | Low risk |
| BlackRock European Absolute Alpha | Targeted Absolute Return | GB00B4Y62W78 | Low risk |
| BMO Global Total Return Bond (GBP Hedged) | Global Bonds | GB0033145268 | Low risk |
| JPM Global Ex UK Bond | Global Bonds | GB0030877210 | Low risk |
| Jupiter Corporate Bond | Sterling Corporate Bond | GB0002691805 | Low risk |
| LF Canlife Global Macro Bond | Global Bonds | GB00B4LW2X97 | Low risk |
| LF Miton Defensive Multi Asset | Mixed Investment 0-35% Shares | GB00B0525B66 | Low risk |
| Merian Global Strategic Bond | Sterling Strategic Bond | GB00B1XG7L17 | Low risk |
| T. Rowe Price Dynamic Global Bond | Global Bonds | GB00BD0NLR34 | Low risk |
| Threadneedle Dynamic Real Return | Targeted Absolute Return | GB00B93TQ868 | 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 |
| Fidelity China Consumer | China/Greater China | GB00B82ZSC67 | Medium risk |
| JPM Japan | Japan | GB00B1XMTP77 | Medium risk |
| LF Blue Whale Growth | Global | GB00BD6PG563 | Medium risk |
| LF Miton European Opportunities | Europe Excluding UK | GB00BZ2K2M84 | Medium risk |
| Liontrust Global Alpha | Flexible Investment | GB0031190555 | Medium risk |
| Royal London Sustainable World Trust | Mixed Investment 40-85% Shares | GB00B882H241 | Medium risk |
| T. Rowe Price Global Focused Growth Equity | Global | GB00BD446774 | Medium risk |
| UBS US Growth | North America | GB00B7VHZX64 | 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 |
| Invesco China Equity (UK) | China/Greater China | GB00B3RW8C79 | High risk |
| Invesco Global Focus (UK) | Global | GB00B3KJYG12 | High risk |
| LF Miton UK Smaller Companies | UK Smaller Companies | GB00B818N094 | High risk |
| Morgan Stanley US Advantage | North America | GB00BZ4CG750 | 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 |
| ASI AAA Bond | Sterling Corporate Bond | GB00B3W48X95 | Low risk |
| ASI UK Government Bond | UK Gilts | GB00B6WZXS38 | Low risk |
| AXA Sterling Strategic Bond | Sterling Strategic Bond | GB00B02Y6L20 | Low risk |
| Barclays Sterling Bond | Sterling Strategic Bond | GB00B72Y6K08 | Low risk |
| BNY Mellon International Bond | Global Bonds | GB0006779655 | Medium risk |
| Franklin UK Gilt | UK Gilts | GB00BYZCTV27 | Medium risk |
| JPM Global Macro | Targeted Absolute Return | GB00B09RGL45 | Low risk |
| Royal London UK Government Bond | UK Gilts | GB00B881TW52 | Medium risk |
| Schroder Global Healthcare | Global | GB00B76V7Q08 | Medium risk |
| T. Rowe Price Global Technology Equity | Technology & Telecommunications | GB00BD446K01 | High risk |
| Threadneedle Global Bond | Global Bonds | GB0001533685 | Medium risk |
| Troy Asset Management Ltd Trojan Ethical | Flexible Investment | GB00BJP0XX17 | 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 23% (28%)
- Alternatives 7% (7%) - 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 26% (20%)
- European Equities 12% (9%)
- Japanese Equities 4% (4%)
- Property 0% (0%)
- UK Equities 5% (5%)
- Gilts 0% (9%)
- Cash 3% (4%)
- Emerging market equities 9% (3%)
- Other international equities 0% (0%)
- Asian Equities 6% (7%)
- 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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