Wild’s Winter Portfolios 2023: winners revealed

Ten years ago, I came across a seasonal anomaly that appeared to put the odds of success in the investors’ favour. Not only did it demonstrate that you can, in some circumstances, time the market, but it was also a simple strategy that told you exactly when to buy and sell. I built two winter portfolios designed to test the theory. This year, we celebrate their 10th anniversary.

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There is very little manual intervention involved in stock selection. We use data supplied by mathematician Stephen Eckett to identify stocks that have risen every winter – between 1 November and 30 April – for the past decade. Picking the five FTSE 350 shares with the best average winter returns creates Wild’s Consistent Winter Portfolio.

Holding this year’s portfolio of most reliable performers for the past 10 winters would have generated an average return of 13.9%, excluding dividends. The benchmark FTSE 350 index returned 3.6%.

For investors happy with extra risk, we relax the entry criteria for Wild’s Aggressive Winter Portfolio to a minimum eight positive years in the past decade. To turbocharge potential returns, we then pick the five FTSE 350 stocks with the highest average annual profit over that time. This year’s basket of higher-risk shares would have delivered an average historic return of 18.2%.

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Performance of both winter portfolios has been more erratic since the pandemic, with seasonal trends disrupted by unusual and shocking stock market behaviour. What’s more, there are plenty of other global events influencing asset prices currently.

It was unclear this time last year whether well-known trends like seasonal strategies would be re-established. Well, despite everything, the higher-risk aggressive portfolio returned 18% in the six months to 30 April, or 19.7% if you include dividends. The FTSE 350 benchmark index rose 10.6% and 12.6% respectively. The consistent portfolio made a 9% profit and total return of 10.5%.

It’s also interesting to see the FTSE 350 index had fallen 8.2% between the end of April and Friday 27 October. And most other major global indices had a miserable summer, too. Only Brazil, India, Japan and US tech stocks are in positive territory for the past six months.

Risks for this year’s winter portfolios

Last week, I ran through a long list of events that might hamper progress this winter. From inflation and interest rate policy to recessions and war, any one of them could cause serious problems for investors.

It seems global central bankers are bringing inflation under control, but progress is slow, especially in the UK. And if targets are missed, or anything happens that implies borrowing costs will stay higher for longer, equity markets will feel the brunt.

The conflict in the Middle East is having a terrible social impact, and the potential for trouble to escalate rapidly could also feed through to oil prices. Any sustained increase in fuel costs is bad news for inflation.

Wild’s Consistent Winter Portfolio 2023-2024

Source: Stephen Eckett. Past performance is not a guide to future performance

Last year’s consistent portfolio delivered a tidy profit, although it could have been much more had Liontrust Asset Management (LSE:LIO) maintained its impressive progress through to the end of winter.

Liontrust shares were up as much as 51% in early February and were still up 20% with just one month of the six-month strategy to run. The banking crisis accelerated a sell-off in the financials sector, with difficult markets and concerns about fund outflows triggering a 14.4% decline in March and 15.9% drop in April.

However, the shares ended the period with a 0.7% gain, maintaining an enviable record of positive winter returns. That means the company makes it into the consistent portfolio for a third year in a row. It’s also interesting that Liontrust has lost a further 34.9% of its value between 30 April and 27 October, so there’s a lot of bad news already in the price.

Self-storage firm Safestore (LSE:SAFE) is back for a fourth year after generating a total return of 11.9% last time. It remains the only constituent with a 100% track record of positive winter returns over the past decade. Both discoverIE Group (LSE:DSCV) and Hilton Food Group (LSE:HFG) are back for a second year after making 13.9% and 12.3% respectively in winter 2022-23, including dividends.

Like Liontrust, these three returning stocks have fallen over the summer. Safestore is down 32.4%, Discoverie 28.8% and Hilton a more modest 4.1%. The only one of this year’s five consistent constituents to have risen over the summer is new entrant InterContinental Hotels Group (LSE:IHG).

The hotelier just missed out on a place in last year’s portfolio, pipped at the post by London Stock Exchange Group (LSE:LSEG). This year it’s turned the tables, ejecting LSE from the top five, but only just, having beaten LSE’s average winter return by less than two-tenths of a percentage point. What’s more, if the hotelier had made the 2022 portfolio, it would have outperformed LSE by 16.3% to 10.3% on a share price basis. Can it repeat the trick this time?

Wild’s Aggressive Winter Portfolio 2023-2024

Source: Stephen Eckett. Past performance is not a guide to future performance

Last year, three members of the consistent portfolio - Safestore, Discoverie and Liontrust - also made it into the aggressive basket of shares. This year, only Safestore survives.

JD Sports Fashion (LSE:JD.) also returns, this time for a second year, although it has appeared numerous times since the winter portfolios began in 2014. It remains a volatile stock, so hold on to your hats. Last year it rallied 65%, recouping the near-39% slump suffered a year earlier. It’s also fallen almost 22% over the summer, so could be due a bounce back.

Hill & Smith (LSE:HILS) makes a return after a two-year absence. It has been a yo-yo constituent of this portfolio, too, but remains capable of big gains if conditions are right. Its share price took momentum from last winter into the summer and is up 18.9% since the end of April, although is off its best levels.

Finally, there are two stocks making their first appearance in the winter portfolios - construction and regeneration firm Morgan Sindall Group (LSE:MGNS) and engineering contractor Keller Group (LSE:KLR). Average returns for both will have been flattered by significant rallies during the 2020-21 Covid recovery period, although both suffered only modest losses during a difficult 2021 for markets.

They’re up over the summer too, adding 9% and 11% respectively. Despite obvious headwinds, both Morgan’s half-year results in August and Keller’s recent optimistic full-year outlook were well received.

Stephen Eckett

Stephen Eckett started his career with Baring Securities and then later worked for Bankers Trust and SG Warburg, during which time he worked in London, Hong Kong and Tokyo. After settling in France, he co-founded Harriman House which became a leading independent publisher of financial books in the UK. He has also written books on finance including the Harriman Stock Market Almanac.