Shares that like/dislike December

Shares that like December

The following table lists the five FTSE 350 shares that have the best returns in December over the last ten years. For example, William Hill has an average return of 5.5% for the month of December. Each stock has risen in every December in the past ten years.

Company TIDM Avg(%)
William Hill 5.5
Balfour Beatty 5.4
JPMorgan Emerging Markets Inv Trust 5.2
Witan Investment Trust 4.8
Alliance Trust 3.8

Shares that dislike December

The following table lists the three FTSE 350 shares that have the worst returns in December over the last ten years. For example, Centamin has an average return of -3.7% for the month of December. All three stocks have fallen in seven of the past ten years in December.

Company TIDM Avg(%)
Centamin -3.7
Rank Group (The) -3.7
Amlin -1.5

An equally-weighted portfolio of the above strong December stocks would have out-performed every year an equally-weighted portfolio of the above weak December stocks by an average of 7.9 percentage points in December for the past ten years.

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Equity Investment Instruments sector monthly seasonality analysis

The 2013 edition of the Almanac looks at the historic monthly performance of the FTSE 350 sectors. Here we look at the Equity Investment Instruments sector.

The following chart plots the average out-performance of the FTSE 350 Equity Investment Instruments sector over the FTSE 100 Index by month since 1999. For example, since 1999 on average the sector has out-performed the FTSE 100 Index by 1.9 percentage points in January.

Observations:

  1. The strongest months have been January and May – the sector has under-performed the market only two times in January in the last 14 years.
  2. The weakest month has been October – the sector has out-performed the market only five times in October in the last 14 years.

The 46 stocks in the FTSE 350 Equity Investment Instruments sector [NMX8980] are-

3i Infrastructure Ltd [3IN] John Laing Infrastructure Fund Ltd [JLIF]
Aberforth Smaller Companies Trust PLC [ASL] JPMorgan American Investment Trust PLC [JAM]
Alliance Trust PLC [ATST] JPMorgan Emerging Markets Inv Trust PLC [JMG]
Bankers Investment Trust PLC [BNKR] JPMorgan Indian Investment Trust PLC [JII]
BH Global Ltd [BHGG] Law Debenture Corporation (The) PLC [LWDB]
BH Macro Ltd [BHMU] Mercantile Investment Trust (The) PLC [MRC]
BlackRock World Mining Trust PLC [BRWM] Merchants Trust (The) PLC [MRCH]
Bluecrest Allblue Fund Ltd [BABS] Monks Investment Trust (The) PLC [MNKS]
British Assets Trust PLC [BSET] Murray Income Trust PLC [MUT]
British Empire Securities & General Trust PLC [BTEM] Murray International Trust PLC [MYI]
Caledonia Investments PLC [CLDN] NB Global Floating Rate Income Fund Ltd [NBLS]
City of London Investment Trust (The) PLC [CTY] Perpetual Income & Growth Investment Trust PLC [PLI]
Dexion Absolute Ltd [DAB] Personal Assets Trust PLC [PNL]
Edinburgh Dragon Trust PLC [EFM] Polar Capital Technology Trust PLC [PCT]
Edinburgh Investment Trust (The) PLC [EDIN] RIT Capital Partners PLC [RCP]
Electra Private Equity PLC [ELTA] Scottish Investment Trust PLC [SCIN]
Fidelity China Special Situation PLC [FCSS] Scottish Mortgage Investment Trust PLC [SMT]
Fidelity European Values PLC [FEV] Temple Bar Investment Trust PLC [TMPL]
Foreign & Colonial Investment Trust PLC [FRCL] Templeton Emerging Markets Investment Trust PLC [TEM]
Genesis Emerging Markets Fund Ltd [GSS] TR Property Investment Trust PLC [TRY]
Herald Investment Trust PLC [HRI] Utilico Emerging Markets Ltd [UEM]
HICL Infrastructure Company Ltd [HICL] Witan Investment Trust PLC [WTAN]
International Public Partnership Ltd [INPP] Worldwide Healthcare Trust PLC [WWH]
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FTSE 100 Index Quarterly Reviews – the effect on share prices when companies leave/join the index

To keep the FTSE 100 Index in accordance with its purpose, the constituents of the index are periodically reviewed.

The reviews take place on the Wednesday after the first Friday of the month in March, June, September and December. If any changes are to be made (i.e. companies ejected and introduced) these are announced sometime after the market has closed on the day of the review.

The action of leaving or joining the index can have a significant influence on the share price.

When companies leave the FTSE 100 Index

When companies leave the Index the share price often falls in the period immediately before the ejection and then rises afterwards.

This might be explained by index-tracking fund managers selling the company in anticipation of it leaving the index, and then the shares bouncing back after having been artificially oversold.

The following chart shows the impact on the share price of Alliance Trust when it left the FTSE 100 Index in March 2011.

Alliance Trust leaves the FTSE 100 Index

The index-leaving effect is not always as marked as that in the above case (for example, the price movements can be much shorter-term than was the case for Alliance Trust), but a similar reaction can be seen in many companies leaving the index.

 When companies join the FTSE 100 Index

When companies join the Index the share price often rises in the period immediately before joining and then is flat or falls back slightly afterwards.

This might be explained by index-tracking fund managers buying the company in anticipation of it joining the index.

The following chart shows the impact on the share price of ITV when it joined the FTSE 100 Index in March 2011.

ITV joins the FTSE 100 Index in March 2011

Again, as before, the index-joining effect is not always as marked as in the case for ITV, but a similar behaviour can be seen in many companies joining the index.

Further examples of the behaviour of share prices for companies leaving and joining the FTSE 100 Index can be seen in the Almanac.


See also-

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