Investors needed to be doing something special to outperform the FTSE 100 during the first three months of 2013, rising as it did by 8.7pc. While there was little concrete evidence that the global economy is fully on the mend, equities became an increasingly attractive option against cash and bonds – and it was a strategy that paid off handsomely.
Indeed, the mini bull run that got underway six weeks before the close of last year continued largely unabated – driving up the index to 6504 points in mid-March before a modest retreat. Heading into the second quarter, creeping concerns, particularly on the subject of commodity prices have introduced some more serious looking wobbles to the FTSE. That uncertainty chimes with the views of some analysts who think that ‘Sell in May’ (or earlier) would be a judicious move this year.
For those investors prepared to take a ‘quant’ approach to the market, ditching the froth and frenzy that comes with rising markets in favour of systematic strategies, worked well - albeit not as well as in some previous quarters, presumably reflecting the way a rising market tide indiscriminately lifts all boats. Most of the screening strategies modelled at Stockopedia did beat the market, with 56pc of the GuruModel investment portfolios (long and short) outperforming the FTSE 100. Taking into account the murky world of fund fees, which can take a sizeable percentage bite out of returns, then the vast majority of these models from the masters of finance would likely have trounced net managed fund returns.
Overall, 30 of the long only strategies produced increases ranging from 8.9pc to 20.0pc. Over 12 months, the Stockopedia Composite Index of these models has produced a return of 16.2pc versus 9.43pc for the index of leading shares.
Quality rules but bargains still on offer
Among the top performing guru portfolios there was a definite trend towards ‘quality’ stocks with a growth flavour. However, the very best performance was reserved for the volatile Ben Graham-inspired ‘Net Nets’ bargain stock screen, which just edged a 20pc return. Graham’s ultra conservative valuation model, which digs out stocks trading at less than liquidation value by a sizeable margin, has continued to turn up valuation turnarounds. That performance has sustained its position at the top of the bargain screen list into the second quarter.
Meanwhile, the F-Score checklist for financial…
