This shortlist of funds is then grouped by its sector categories (such as Japan or UK All Companies) in our Best by Sector section.
We then pick the best opportunities from this selection based on the inherent risk level of each fund. This is how we arrive at our Best of the Best Selection
Since launch, the Best of the Best Selection (the green line) has significantly outperformed the market (black line) and the average fund manager (red line) as can be seen in the chart below (click to expand):
Yet it is always interesting looking at what is working in the current environment on a broad sector/asset basis especially if you want to decide the types of assets/sectors you want to invest in yourself. One simple way is to see which sectors have performed well over recent history. So below I show you the best and worst performing sectors over the last 6 month and 1 month periods.
Don't forget these figures are for the average fund within the sector so behind those figures will be funds doing much better and much worse. That is why the 80-20 Investor algorithm analyses funds without reference to their sector categorisations.
Interesting points to note
One of the interesting points to note is the strong performance of UK equities. UK equities had a lacklustre start to 2015, yet their resurgence has gone unnoticed by most. However, 80-20 Investor subscribers will have already been aware of the gathering momentum as the UK All Companies sector appeared in the Best of the Best Selection last month. Good to see that the 80-20 Investor algorithm spotted that trend and benefited as a result.
It is intriguing to see UK Smaller Companies also performing strongly. This was the area championed by most of the City fund managers in my piece The UK stock market: where the City’s smart money is investing and an area in which I've invested part of my £50,000 portfolio.
The fortunes in the Far East are also worth noting. Chinese equities are in the midst of a huge rally which has wobbled in the last week. While Japanese equities have enjoyed their longest winning streak since 1998. Those following the fortunes of my £50,000 portfolio will have noticed that I've taken some profits in China and reinvested into Japanese equities as well as UK Smaller Companies.
Top 5 performing sectors over the last 6 months
| Sector | 1 month return of average fund | 6 month return of average fund |
| China/Greater China | -1.71 | 19.93 |
| Japan | -0.14 | 17.08 |
| European Smaller Companies | 1.96 | 15.33 |
| Japanese Smaller Companies | -1.04 | 13.86 |
| UK Smaller Companies | 3.84 | 12.68 |
Worst 5 performing sectors over the last 6 months
| Sector | 1 month return of average fund | 6 month return of average fund |
| Global Emerging Market Bond | -0.9 | -1.67 |
| Global Bonds | -1.1 | -1 |
| Global Emerging Markets | -2.91 | 1.08 |
| UK Gilts | -0.62 | 1.4 |
| Sterling Strategic Bond | -0.35 | 1.99 |
Top 5 performing sectors over the last 1 month
| Sector | 1 month return of average fund | 6 month return of average fund |
| UK Smaller Companies | 3.84 | 12.68 |
| UK All Companies | 2.41 | 10.75 |
| UK Equity Income | 2.02 | 9.7 |
| European Smaller Companies | 1.96 | 15.33 |
| Technology & Telecoms | 1.93 | 10.87 |
Worst 5 performing sectors over the last 1 month
| Sector | 1 month return of average fund | 6 month return of average fund |
| Global Emerging Markets | -2.91 | 1.08 |
| Asia Pacific Excluding Japan | -2.24 | 7.55 |
| Asia Pacific Including Japan | -1.92 | 9.74 |
| China/Greater China | -1.71 | 19.93 |
| Global Bonds | -1.1 | -1 |
