Summer Portfolio winners revealed by Lee Wild
Summer is typically more pedestrian in terms of share price performance. However, after extensive research, Interactive Investor has uncovered two seasonal portfolios which have significantly outperformed the wider market over the summer months for the past decade. Now we can reveal the constituents of both portfolios and the rationale behind their inclusion.
Like our hugely successful Winter Portfolios, the summer version is incredibly simple. All it requires is that investors buy a portfolio of stocks on Friday 1 May and sell it on Friday 30 October. The beauty here is that investors are guided by both a defined entry and an exit point, which takes the stress out of trying to time the market.
As before, we screened the FTSE 350 for those stocks with the most consistent gains over the six-month period for the past 10 years. To keep our portfolios manageable, we picked the top five. Our other basket of shares is more aggressive, including companies boasting a slightly shorter track record, but with even higher potential returns.
Interactive Investor Consistent Summer Portfolio
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Data compiled by Harriman House, publisher of The UK Stock Market Almanac, reveals that the FTSE 350 has risen by an average of just 0.3% a year for the past decade.
However, rather than accept these measly returns we teamed up with Almanac author, Stephen Eckett, to build a pair of seasonal portfolios able to thrash the wider market. First, we took the companies which had delivered the most positive annual returns over the past 10 years, then picked the best five performers from that list.
The result is an Interactive Investor Consistent Summer Portfolio – our Summer Smoothie – which has averaged annual growth of 8.9% since 2005. What’s more, the portfolio has lost money just once in the past decade – in 2008 – but even then it beat the FTSE 350 by 19%. The benchmark has actually fallen in three summers out of the past 10.
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By fine-tuning our selection process, we found that we could build a portfolio with a history of much greater returns. Of course, with greater potential returns comes extra risk, hence the naming of our Aggressive Summer Portfolio – the Summer Sizzler.
To do so, we had to relax our entry criteria very slightly. To maintain credibility, however, we still demanded a minimum of eight years as a FTSE 350 company and 70% success rate in terms of positive annual returns.
By cherry-picking the best performers, our basket of shares – which includes soap maker PZ Cussons from the Consistent Portfolio – significantly outperformed the benchmark index every year for the past decade, this time by an average of 17%. Again, this portfolio only lost money in 2008.
Click here to buy Interactive Investor’s Summer Portfolios.
*Do remember to factor in commission costs when purchasing model portfolios. Small sums invested will be disproportionately impacted by charges.
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