Commentary
13 funds from last month's 29 Best of the Best Selection regained their position in January's shortlist. After a disappointing November the Best of the Best (BOTB) Selection bounced back in December and was up 2.62% for the month. To give that wider context, the BOTB finished 2016 up 16.69%, comfortably outperforming the average multi-asset fund by between 3.58% - 6.79%. Obviously I'm very pleased with that. Also, at the foot of this article you can see how the 80-20 Investor Portfolio has continued to outperform the professional fund managers as well as the market since its launch over 2 years ago.
This month's update to the BOTB has seen the most radical change to its asset mix for some time, completely removing all exposure to emerging markets (particularly China) and Asian equities (excluding Japan). These areas have just recently been a drag on the selection's high risk portion, particularly since Donald Trump won the US election. As I explained fully in my recent update to my £50,000 portfolio the strength of the US dollar after the election was a hammer blow to emerging markets and it mostly didn't matter which emerging market asset you owned. Quite simply if you held any emerging assets their value would have fallen. Interestingly the high risk area of the selection now favours American equities and UK smaller companies. The former is a result of the Trump trade while the latter is due to the UK economy confounding post-Brexit-vote growth expectations. In addition the portfolio now has a number of global equity funds.
Once again the new BOTB's bond holdings remain almost exclusively UK high yield and strategic bond funds, most of which I previously identified (in my article Bond funds for a bond bear market) as having a lower more favourable duration. In fact the low risk portion of the selection has the least number of new funds introduced when compared to the medium and high risk sections of the BOTB. We still see a relatively low number of mixed funds (aka managed funds) as the bond market weakness continues to hinder them. It also helps explain why the cash allocation of the BOTB has risen to 8% as fund managers seek a low risk alternative to holding bonds.
In terms of direct equity exposure the portfolio is now around 60% which is marginally up on last month. Bear in mind that the 'alternatives' listed in the asset mix at the bottom of this article will likely include some exposure to equities but via derivatives etc. Unfortunately the opaque 'alternatives' label is a result of some fund managers' inability to fit their fund holdings into one of the Investment Association's official categories.
Below I list this month's selection in full with the 13 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.
January'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 Level
Artemis - Global Income
Global Equity Income
GB00B5N99561
Medium risk
Artemis - High Income
Sterling Strategic Bond
GB00B2PLJN71
Low risk
Artemis - Strategic Assets
Flexible Investment
GB00B3VDD431
Medium risk
AXA - Framlington Managed Income
Sterling Strategic Bond
GB00B6RPX228
Low risk
AXA - Global High Income
Sterling High Yield
GB00B0T9V375
Low risk
BlackRock - US Dynamic
North America
GB00B87XJQ69
High risk
Cavendish - AIM
UK Smaller Companies
GB00B0JX3X39
High risk
CF - Morant Wright Japan
Japan
GB0033010017
High risk
CF Canlife - Global High Yield Bond
Global Bonds
GB00B9J56009
Low risk
Fidelity - Global High Yield
Sterling High Yield
GB00B7K7SQ18
Low risk
GAM - Global Diversified
Global
GB0002426640
Medium risk
GAM - North American Growth
North America
GB0002423852
High risk
IFSL - Brooks Macdonald Defensive Capital
Targeted Absolute Return
GB00B61MR835
Low risk
Insight - Inflation Linked Corporate Bond
Sterling Strategic Bond
GB00B8CJGZ73
Low risk
Invesco Perpetual - Global Equity
Global
GB00B8N45Y36
High risk
Investec - Cautious Managed
Mixed Investment 20%-60% Shares
GB00B8NZ3M08
Low risk
JOHCM - UK Equity Income
UK Equity Income
GB00B03KR831
Medium risk
L&G - Global Technology Index Trust
Technology & Telecom
GB00B0CNH163
High risk
Man GLG - Japan Core Alpha
Japan
GB00B3F46Y30
High risk
Marlborough - European Multi-Cap
Europe Excluding UK
GB0001719730
Medium risk
Old Mutual - Cirilium Balanced
Mixed Investment 20%-60% Shares
GB00B2Q8V089
Medium risk
Old Mutual - Cirilium Conservative
Mixed Investment 0%-35% Shares
GB00B4LTHW43
Low risk
R&M - UK Equity High Alpha
UK All Companies
GB00B3D79W34
Medium risk
Schroder - European Alpha Plus
Europe Excluding UK
GB00B7LDKR32
High risk
Schroder - Global Equity Income
Global
GB00B76V7M69
Medium risk
Schroder - Monthly High Income
Sterling High Yield
GB00B83RDY83
Low risk
TB Saracen - Global Income & Growth
Global Equity Income
GB00B8MG4091
Medium risk
Templeton - Growth
Global
GB00B7K6LK38
High risk
Unicorn - UK Smaller Companies
UK Smaller Companies
GB0031785065
High risk
Wise Investments - TB Wise Investment
Flexible Investment
GB0034272533
Medium risk
January's Best of the Best Selection - (grouped by risk)
Here is January'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 Level
Artemis - High Income
Sterling Strategic Bond
GB00B2PLJN71
Low risk
AXA - Framlington Managed Income
Sterling Strategic Bond
GB00B6RPX228
Low risk
AXA - Global High Income
Sterling High Yield
GB00B0T9V375
Low risk
CF Canlife - Global High Yield Bond
Global Bonds
GB00B9J56009
Low risk
Fidelity - Global High Yield
Sterling High Yield
GB00B7K7SQ18
Low risk
IFSL - Brooks Macdonald Defensive Capital
Targeted Absolute Return
GB00B61MR835
Low risk
Insight - Inflation Linked Corporate Bond
Sterling Strategic Bond
GB00B8CJGZ73
Low risk
Investec - Cautious Managed
Mixed Investment 20%-60% Shares
GB00B8NZ3M08
Low risk
Old Mutual - Cirilium Conservative
Mixed Investment 0%-35% Shares
GB00B4LTHW43
Low risk
Schroder - Monthly High Income
Sterling High Yield
GB00B83RDY83
Low risk
Artemis - Global Income
Global Equity Income
GB00B5N99561
Medium risk
Artemis - Strategic Assets
Flexible Investment
GB00B3VDD431
Medium risk
GAM - Global Diversified
Global
GB0002426640
Medium risk
JOHCM - UK Equity Income
UK Equity Income
GB00B03KR831
Medium risk
Marlborough - European Multi-Cap
Europe Excluding UK
GB0001719730
Medium risk
Old Mutual - Cirilium Balanced
Mixed Investment 20%-60% Shares
GB00B2Q8V089
Medium risk
R&M - UK Equity High Alpha
UK All Companies
GB00B3D79W34
Medium risk
Schroder - Global Equity Income
Global
GB00B76V7M69
Medium risk
TB Saracen - Global Income & Growth
Global Equity Income
GB00B8MG4091
Medium risk
Wise Investments - TB Wise Investment
Flexible Investment
GB0034272533
Medium risk
BlackRock - US Dynamic
North America
GB00B87XJQ69
High risk
Cavendish - AIM
UK Smaller Companies
GB00B0JX3X39
High risk
CF - Morant Wright Japan
Japan
GB0033010017
High risk
GAM - North American Growth
North America
GB0002423852
High risk
Invesco Perpetual - Global Equity
Global
GB00B8N45Y36
High risk
L&G - Global Technology Index Trust
Technology & Telecom
GB00B0CNH163
High risk
Man GLG - Japan Core Alpha
Japan
GB00B3F46Y30
High risk
Schroder - European Alpha Plus
Europe Excluding UK
GB00B7LDKR32
High risk
Templeton - Growth
Global
GB00B7K6LK38
High risk
Unicorn - UK Smaller Companies
UK Smaller Companies
GB0031785065
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. Many of them remain in the Best funds by Sector selection:
Name
Sector
ISIN Code
Risk Level
7IM - Unconstrained
Targeted Absolute Return
GB00B75MS619
Medium risk
Artemis - Global Emerging Markets
Global Emerging Markets
GB00BW9HL132
High risk
Artemis - Monthly Distribution
Mixed Investment 20%-60% Shares
GB00B6TK3R06
Medium risk
Baillie Gifford - Corporate Bond
Sterling Strategic Bond
GB0005947741
Low risk
Baillie Gifford - Japanese
Japan
GB0006011133
High risk
Fidelity - China Consumer
China/Greater China
GB00B82ZSC67
High risk
Henderson - China Opportunities
China/Greater China
GB0031860934
High risk
Invesco Perpetual - Asian
Asia Pacific Excluding Japan
GB00B8N44Q86
High risk
Jupiter - Income Trust
UK Equity Income
GB0004791389
Medium risk
Jupiter - UK Special Situations
UK All Companies
GB0004777347
Medium risk
Majedie - UK Equity
UK All Companies
GB0033283895
Medium risk
Man GLG - Corporate Bond
Global Bonds
GB00B0118B85
Medium risk
Marlborough - Far East Growth
Asia Pacific Excluding Japan
GB00B0NVCN62
High risk
Rathbone - Strategic Bond
Sterling Strategic Bond
GB00B6ZS1L87
Low risk
Threadneedle - Dollar Bond
Global Bonds
GB00B9BRCL73
Medium risk
Threadneedle - Dynamic Real Return
Targeted Absolute Return
GB00BWWC6P48
Low 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 19% (15%)
Alternatives/Other 14% (18%) - mostly absolute return strategies
UK Corporate Fixed Interest (i.e UK bonds) 3% (10%)
North American Equities 17% (12%)
European Equities 11% (7%)
Japanese Equities 9% (8%)
Property 0% (0%)
UK Equities 19% (12%)
Cash 8% (5%)
Asian equities 0% (4%)
Asia Pacific Emerging equities 0% (9%)
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 the FTSE 100 (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 60-85% 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 HUGELY outperformed the average managed fund and the market. The large spike in performance in the 80-20 Investor portfolio on the right hand side of the chart is where the portfolio rallied after the Brexit referendum while global markets plummeted.
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The post 80-20 Investor Best of the Best Selection – January 2017 Update appeared first on Money To The Masses.