Bounceback portfolio 2017

The Bounceback Portfolio invests in the 10 worst performing FTSE 350 stocks of the previous year and holds them for the 3-month period, January-March. 

Let’s see how the Bounceback Portfolio fared in 2017.

Performance in 2017

The following table lists the ten worst performing FTSE 350 stocks in 2016. These ten stocks form the 2017 Bounceback Portfolio.

The final column in the table also gives the returns for each stock for the period Jan-Mar 2017. For example, Capita shares fell 56.0% in 2016, and then rose (bounced back) 6.3% in the first three months of 2017.

Company TIDM 2016 2017 (Jan-Mar)
Capita -56.0 6.3
Restaurant Group (The) -52.7 2.8
Sports Direct International -51.7 10.6
Essentra -44.3 13.9
easyJet -42.2 2.1
International Personal Finance -40.4 -5.0
IG Group Holdings -38.4 0.6
McCarthy & Stone -36.6 17.4
Inmarsat -33.9 13.2
Man Group -32.6 24.5
FTSE 350 12.5 2.9

For reference, the performance of the FTSE 350 Index is also shown for the same periods.

As can be seen, the majority of the bounceback stocks outperformed the Index in the first quarter of 2017.

The performance of the 10 Bounceback Portfolio stocks for Jan-Mar 2017 is shown in the following chart.

Bounceback portfolio 2017 Returns Jan-Mar 2017

On average the Bounceback Portfolio stocks had a 3-month return of 8.6%, compared with a FTSE 350 Index return of 2.9% for the same period.

So, an equally-weighted portfolio of the ten bounceback stocks would have outperformed the FTSE 350 Index by 5.7 percentage points over the target first three months of 2017.

Bounceback portfolio performance 2003-2017

The Bounceback strategy has been tracked since 2003. The following chart shows the comparative performance of the portfolio and the FTSE 350 Index for each year since 2003.

Bounceback portfolio v FTSE 350 - Jan-Mar returns [2003-2017]

Since 2003, the Bounceback Portfolio has under-performed the index only twice (in 2013 and 2015).

The following chart shows the cumulative performance of the portfolio from 2003.

Bounceback portfolio cumulative performance - Bounceback portfolio v FTSE 350  [2003-2017]

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Bounceback Portfolio 2017

The Bounceback Portfolio invests in the 10 worst performing FTSE 350 stocks of the previous year and holds them for the 3-month period, January-March. 

The Bounceback Portfolio for 2016 recorded the best performance ever for the strategy: a 3-month return of 38.5%, compared with a FTSE 350 Index return of -1.4% for the same period.

The following table lists the ten worst performing FTSE 350 stocks in 2016. These are the ten stocks that will comprise the 2017 Bounceback Portfolio.

Company TIDM Return in 2016 Return since 31/12/2016
Capita CPI -56.0 -2.4
Restaurant Group (The) RTN -52.7 6.0
Sports Direct International SPD -51.7 2.3
Essentra ESNT -44.3 -1.3
easyJet EZJ -42.2 7.4
International Personal Finance IPF -40.4 -4.4
IG Group Holdings IGG -38.4 7.1
McCarthy & Stone MCS -36.6 4.8
Inmarsat ISAT -33.9 2.1
Man Group EMG -32.6 2.4

The final column gives the returns for the individual stocks for the first six days of the 2017. The portfolio as a whole has seen a return of 2.4% for the first six days of 2017, against a return of 1.9% for the FTSE 350 Index.

The Bounceback Portfolio is meant to be held until the end of the March 2017, but it is good to see that it has started the year well so far.


 

More articles on the Bounceback Portfolio.

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Shares that like/dislike July

Shares that like July

The following table lists the five FTSE 350 shares that have the best returns in July over the last ten years. For example, Greene King has an average return of 7.3% for the month of July. Each stock has risen in July in nine of the past ten years, while Greene King is the only FTSE 350 stock to have risen in July for all the last ten years.

Company TIDM Avg(%)
Pace 17.6
Greene King 7.3
Brown (N) Group 6.7
Wetherspoon (J D) 5.2
Dairy Crest Group 4.7

Shares that dislike July

The following table lists the two FTSE 350 shares that have the worst returns in July over the last ten years. For example, Petra Diamonds has an average return of -6.6% for the month of July. Both stocks have fallen in July in eight of the past yen years.

Company TIDM Avg(%)
Petra Diamonds Ltd -6.6
Man Group -1.6

An equally-weighted portfolio of the above strong July stocks would have out-performed every year an equally-weighted portfolio of the above weak July stocks by an average of 12.4 percentage points each July for the past ten years.

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Bounceback Portfolio 2013 – Result

The idea of the Bounceback Portfolio is that a portfolio of the 10 worst performing FTSE 350 stocks in one year has historically beaten the index in the first three months of the following year. This is explained in further detail in the UK Stockmarket Almanac 2013 and in this post at the beginning of the year.

The following chart shows the performance of the stocks in the Bounceback Portfolio 2013

The portfolio as a whole increased 2.4% in the first quarter 2013, but this was less than the FTSE 350 Index, which rose 9.2% in the same period. This is the first time since 2002 that the Bounceback Portfolio has under-performed the index in the first quarter.

Hindsight is a wonderful thing:  obviously the time to take profits was just two weeks into the year.


Dogs of the Dow

A related strategy is the Dogs of the Dow, where the ten stocks in the Dow Jones Index  with the highest dividend yield on the final day of the year are bought. So far, this portfolio is faring better than the above Bounce back Portfolio.

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Financial Services 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 Financial Services sector.

The following chart plots the average out-performance of the FTSE 350 Financial Services sector over the FTSE 100 Index by month since 1999. For example, since 1999 on average the Financial Services sector has out-performed the FTSE 100 Index by 2.3 percentage points in January.

Observations:

  1. The strongest months are January and March – the sector has under-performed the market only four times in the past 13 years in January.
  2. The weakest month has been February – the sector has out-performed the market only five times in this month in the last 13 years.

The 23 stocks in the FTSE 350 Financial Services sector [NMX8770] are-

3i Group [III] Investec [INVP]
Aberdeen Asset Management [ADN] IP Group [IPO]
Ashmore Group [ASHM] Jupiter Fund Management [JUP]
Brewin Dolphin Holdings [BRW] London Stock Exchange Group [LSE]
Close Brothers Group [CBG] Man Group [EMG]
F&C Asset Management [FCAM] Paragon Group of Companies (The) [PAG]
Hargreaves Lansdown [HL.] Provident Financial [PFG]
Henderson Group [HGG] Rathbone Brothers [RAT]
ICAP [IAP] Schroders [SDR]
IG Group Holdings [IGG] SVG Capital [SVI]
Intermediate Capital Group [ICP] Tullett Prebon [TLPR]
International Personal Finance [IPF]
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The Bounceback Portfolio for 2013

The 2013 edition of the Almanac explained the Bounceback Strategy, whereby a portfolio of the 10 worst performing stocks in the FTSE 350 in one year is held for the first three months of the following year.

A portfolio of such stocks has out-performed the FTSE 350 Index in every year since 2002.

The following table lists the 10 worst performing FTSE 350 stocks in 2012 (i.e. these comprise the Bounceback Portfolio for 2013).

Company Performance in 2012 (%)
Bumi -68.8
Eurasian Natural Resources Corporation -55.3
Centamin -52.4
Lonmin -45.5
Chemring Group -42.6
Petropavlovsk -41.3
FirstGroup -38.1
Man Group -34.2
Kenmare Resources -32.4
Bwin.Party Digital Entertainment -32.2

 

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