80-20 Investor Best of the Best Selection – July 2018 Update

As discussed in July's monthly newsletter, June was the month when markets reacted to the mounting trade war threats. Typically in any given month either riskier assets perform strongly or the opposite is true and lower risk assets outperform.

But if you look at the latest heatmap you can see that there was a divergence of returns across assets and risk levels. It was the escalation in the trade war between the US and China (but also Europe) that was the culprit. Assets that are predicted to be the ultimate winners in the trade war such as smaller companies stocks and US equities (most notably tech stocks) rallied. While those deemed to be the ultimate losers in a full-blown trade war (Chinese equities, Asian equities and emerging markets) underperformed. It is therefore not surprising that none of the latter are in this month's BOTB selection or the latest BFBS update.