Background
Back in March 2015 I decided to invest £50,000 of my own money using 80-20 Investor. The purpose was two-fold, firstly to show how you can use 80-20 Investor to invest and outperform the market with only a few minutes effort every now and then. Secondly, no other investment commentator, journalist or research provider invests their own money for fear of failing. This is a sorry state of affairs and is precisely why I committed to openly running my own portfolio for 80-20 Investor members to see.
Since then I have periodically changed my portfolio using the fund suggestions provided by the 80-20 Investor algorithm and associated research. I always disclose the changes at the time they are made.
My portfolio fund review
Last week I produced a lengthy analysis of how my portfolio is outperforming the market and 90% of funds managers.
My portfolio currently looks like this:
| Fund | % allocation |
| Fundsmith Equity Fund | 20.27% |
| Fidelity Global Dividend | 8.93% |
| Aberdeen Property Trust | 4.82% |
| Newton UK Income | 7.61% |
| Legg Mason Japan Equity | 7.61% |
| GLG Continental European Growth | 10.17% |
| Jupiter Absolute Return | 6.78% |
| Troy Trojan | 5.06% |
| Threadneedle Global Bond | 8.59% |
| Vanguard Lifestrategy 20% Equity | 20.16% |
At the the end of last week's analysis I mentioned that a number of the above funds remain in the Best of the Best shortlist and that my portfolio has started May very well.
In light of both of these facts I do not need to make any wholesale changes. Having said that I've decided to make a couple of minor tweaks. Of the funds currently in my portfolio the following remain in the Best of the Best Selection and so will be left alone:
- Fundsmith Equity Fund
- Legg Mason Japan Equity
- Threadneedle Global Bond
- Vanguard Lifestrategy 20% Equity
Interestingly the Fidelity Global Enhanced Income fund is in this month's Best of the Best Selection. If you look at the chart below which shows the performance of the fund versus the Fidelity Global Dividend fund (which is in my £50k portfolio) you will see they are essentially the same fund. So therefore I will keep the Fidelity Global Dividend fund in my portfolio for now.
Of the other funds the following remain in the shortlists of Best funds in their Sectors:
- Jupiter Absolute Return
- Troy Trojan
For now I am happy to leave these funds in the portfolio as protection against a market crash but I will be reviewing them again at the start of next month when the new Best of the Best Selection is published.
Fund switches
That leaves three funds to change:
- Aberdeen Property Trust
- GLG Continental European Growth
- Newton UK Income
Switch 1
The Aberdeen Property Trust was originally included in my portfolio as a diversifier. As it invests in actual buildings its returns are less volatile and uncorrelated to equities and bonds. The fund has served its purpose in that respect, however, it has not materially added to the portfolio's performance and the outlook for commercial property is less favourable than it was.
Therefore I am switching totally out of that fund and into the Barclays - Sterling Bond (ISIN GB00B72Y6K08) which is in this month's Best of the Best Selection. This is a strategic bond fund so while low risk it is slightly higher risk than a standard corporate bond fund, which is reflected in its slightly higher 'Max weekly fall figure in the last 6 months' in the data tables.
Switch 2
Both the GLG Continental European Growth fund and the Newton UK Income fund have dropped out of the current 80-20 Investor shortlists. Interestingly over recent months the algorithm has been reducing its direct exposure to both UK equities and European equities. At certain points exposure to either one has been removed entirely. This is not surprising given the uncertainty surrounding the UK EU Referendum next month.
As such I plan to switch out of both funds and split the proceeds between the existing Fidelity Global Dividend fund and the higher risk First State Global Listed Infrastructure fund (ISIN GB00B24HJC53). The reasons for doing so are:
- both funds are global funds with a broad geographical exposure
- the latter features in the Best of the Best Selection
- it will maintain my portfolio's overall risk level
- I also identified the First State Global Listed Infrastructure as one of the Global funds to weather a ‘Brexit’ tantrum.
My new portfolio
My new portfolio now looks like this is:
| Fund | % allocation |
| Fundsmith Equity Fund | 20.27% |
| Fidelity Global Dividend | 13.36% |
| Barclays - Sterling Bond | 4.82% |
| Vanguard Lifestrategy 20% Equity | 20.16% |
| Legg Mason Japan Equity | 7.61% |
| First State - Global Listed Infrastructure | 13.35% |
| Jupiter Absolute Return | 6.78% |
| Troy Trojan | 5.06% |
| Threadneedle Global Bond | 8.59% |
| TOTAL | 100% |
This gives an asset allocation of approximately (numbers in brackets represent the previous allocation):
- Global fixed interest - 20% (20%)
- US equities - 26% (17%)
- European equities - 8% (16%)
- UK equities - 9% (15%)
- Japanese equities - 9% (9%)
- Other international equities - 7% (7%)
- Cash - 5% (2%)
- Property - 0% (4%)
- UK Gilts - 3% (2%)
- UK Fixed Interest 4% (0%)
- Alternative assets/strategies - 9% (8%)
Interestingly my allocation is now different from the current allocation of the 80-20 Portfolio (Best of the Best Selection), although not a million miles away from it. The biggest difference is that I am prepared to take more risk with my portfolio and so have an equity allocation of 60%, which is 10-20% higher than the Best of the Best Selection. Nearly all of this extra equity exposure in my portfolio is in the US with some in Europe. However, I'll likely bring my portfolio's asset allocation more in line with that of the 80-20 Investor Best of the Best Selection at the start of next month.
The ISIN codes for the funds in my portfolio are as below:
| Name | ISIN Code |
| Barclays - Sterling Bond | GB00B72Y6K08 |
| Fidelity - Global Dividend | GB00B7FQHJ97 |
| Fundsmith - Equity | GB00B4LPDJ14 |
| Jupiter - Absolute Return | GB00B5129B32 |
| Legg Mason - IF Japan Equity | GB0033507467 |
| First State - Global Listed Infrastructure | GB00B24HJC53 |
| Vanguard - LifeStrategy 20% Equity | GB00B4NXY349 |
| Threadneedle - Global Bond | GB0001533685 |
| Troy Asset Management Ltd - Trojan | GB0034243732 |
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Neither MoneytotheMasses.com/80-20 Investor nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.
Funds invest in shares, bonds, and other financial instruments and are by their nature speculative and can be volatile. You should never invest more than you can safely afford to lose. The value of your investment can go down as well as up so you may get back less than you originally invested.
Information provided by MoneytotheMasses.com/80-20 Investor is for general information only and not intended to be relied upon by readers in making (or not making) specific investment decisions.
Appropriate independent advice should be obtained before making any such decisions. Leadenhall Learning (owner of MoneytotheMasses.com/80-20 Investor) and its staff do not accept liability for any loss suffered by readers as a result of any such decisions.
The tables and graphs are derived from data supplied by Trustnet. All rights Reserved.
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