Wild’s Winter Portfolios 2020: gap to benchmark narrows significantly
There was further progress during February, but our portfolios have just two months to beat the market.
5th March 2021 15:23
by Lee Wild from interactive investor
There was further progress during February, but our portfolios have just two months to beat the market.
Stock markets ended February in a similar manner to how they had ended the previous month – tumbling lower. Thankfully, a mid-month rally meant there was room to play with, and indices finished in positive territory.
A successful vaccination programme and the UK’s roadmap out of lockdown is clearly good news. But we’re seeing more switching out of growth stocks and increasing talk about inflation and interest rate rises coming sooner than expected. Watch bond yields for further clues.
The FTSE 350 index rose 1.6% in February, but it was trounced for a second month in a row by Wild’s Aggressive Winter Portfolio, which jumped 3.2%. The Consistent Winter Portfolio delivered a more modest 1.3% gain for the month.
As explained before, this winter has been all about playing catch-up. The winter portfolio companies had already enjoyed a purple patch prior to the start of this six-month strategy at the end of October. They had recovered fully from the Covid collapse in March and many were at or near record highs.
However, many FTSE 350 stocks took longer to recoup their pandemic losses. Plenty of them only did so following confirmation of Pfizer’s (NYSE:PFE) vaccine in November. As such, they were at pre-recovery prices when our winter portfolios launched.
| Consistent Winter Portfolio |
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| Compiling the two winter portfolios is straightforward. The Consistent portfolio is a basket of five FTSE 350 stocks with the most stable track record of returns over the past decade. Each has risen every year for the past 10 years. |
| Aggressive Winter Portfolio |
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| For the Aggressive Winter Portfolio, the FTSE 350 constituents must have delivered the highest average annual returns over the winter. While average returns are our primary criterion, stocks must also have risen over the winter months in at least nine of the past 10 years. |
With two months left to go, both Wild’s consistent and aggressive portfolios are in positive territory for this season’s strategy – up 5.2% and 12.8% respectively. But the FTSE 350 benchmark index is up 17.2%
I asked last month whether the portfolios could overtake the FTSE 350. Well, they came as close as they have done on 22 February when the aggressive portfolio stood 17.9% higher compared with the benchmark index up 19.1%. It’s going to be a close call.
Source: interactive investor. Past performance is not a guide to future performance
Wild’s Consistent Winter Portfolio 2020-21
Source: interactive investor. Past performance is not a guide to future performance
Although it lags both its sister portfolio and the benchmark index this winter, there are some star performers in this consistent portfolio.
London Stock Exchange (LSE:LSEG) celebrated completion of its $27 billion purchase of data giant Refinitiv with a two-week rally to a record high. The shares changed hands for above £100 each for the first time and, despite some profit taking, ended the month with a 10.7% profit and a 16.2% gain for this winter’s portfolio.
Insurer Admiral (LSE:ADM) has done well, too, adding 7.1% in February, taking its four-month return to 12.3%. The shares, however, are 'priced for perfection', so any slip-ups could be punished.
The portfolio's other three constituents have been rather a let-down so far, especially Halma (LSE:HLMA) whose reliability guaranteed entry to this year’s basket of consistent shares. The highly-rated shares fell 8.2% in February and are now down 4.3% in the past four months.
Self-storage firm Safestore (LSE:SAFE) is flat for this winter strategy after a 1.4% decline last month. First-quarter results were warmly received but gains disappeared over the next week.
Finally, speciality chemicals giant Croda International (LSE:CRDA) lost 1.9% over the month. This stock never falls in the winter months, and it is still up 2.2% since late October, so hopes are high that it will extend its impressive seasonal track record.
Wild’s Aggressive Winter Portfolio 2020-21
Source: interactive investor. Past performance is not a guide to future performance
As well as London Stock Exchange, which, like Safestore, lives in both portfolios this year, two of this winter’s best performers are driving gains for the aggressive basket of shares.
Synthomer (LSE:SYNT), the latex gloves firm, rose a further 6.9% in February, taking its winter gains to 21.9%. There was excitement towards the end of the month when management was forced to confirm “it is not in discussions regarding a possible offer for the company”.
Precision instruments star Spectris (LSE:SXS) lost a fraction of a percent last month, but is still up 22.5% this winter. Annual results triggered appositive share price reaction, but it was not enough to make up ground lost since mid-month.
Technical products and services company Diploma (LSE:DPLM) ended the month where it began, but not before it made a record high. At its peak the shares were up almost 15% for this year’s winter portfolio, but a limp finish unwound those hard-won gains.
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