Why you shouldn’t just focus on fund performance

The Chatterbox section of 80-20 Investor is fast becoming a treasure trove of insights and Q&A's. Normally I always answer any questions posed to me beneath the original question itself within Chatterbox. However, I felt the answer to one question in this month's Chatterbox warranted being turned into a full article for wider circulation. In doing so it will prove a great reference piece that demonstrates how the 80-20 Investor algorithm actually works in practice. Here is the question:

Hi Damien

I have a question which although concerns a specific investment trust, it will help me understand how the 80-20 algorithm works. The trust in question is Value & Income which resides in the UK Equity Income sector. According to FE Trustnet its performance rankings are 2nd over 1 month, 6th over 3 months, 1st over 6 months and 1st over 12 months.