SIF Folio: My UK fund lags the market in H1 + international update

Tuesday, Jul 09 2019 by
18
SIF Folio My UK fund lags the market in H1  international update

We’re now more than half way through 2019, so now seems a good time to take a look at the performance of my rules-based SIF fund over the first half of the year.

I think that the results so far this year can best be described as mixed. Although the portfolio has risen by 7.2% over the last six months, the benchmark FTSE All Share index has gained more than 10%.


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This means that the fund’s lead over the wider market has narrowed:

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However, the picture remains fairly positive if we consider performance since the portfolio’s inception in April 2016:

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The story here seems to be that the portfolio outperformed from (approximately) January 2017 to July 2018. From July ‘18 to May ‘19 it broadly followed the market. And over the last couple of months, SIF has lagged the market.

This suggests to me that my rules work best in a bull market where strong stocks find good support. Given my short (nine month) holding periods and inclusion of momentum metrics, that’s not a surprise. However, it does mean that I could now face a longer period of underperformance.

As my Stockopedia colleague Jack Brumby explains in his latest piece, most strategies experience such periods of underperformance. They aren’t necessarily a reason to make changes, and I certainly have no intention of doing so.

As we head into an uncertain second half, I’m going to continue running the SIF fund as I have previously. I’ll revisit the fund’s performance at the start of 2020 to see how this plan has worked out.

New stocks this week?

My UK Stock in Focus (SIF) screen remains a desert, dominated by a handful of mining stocks. However, SIF already contains two mining stocks after last week’s addition of Capital Drilling (LON:CAPD). I won’t be adding any more stocks from this sector for the time being.

The only remaining stock in my screen results that I could consider adding is small-cap construction firm Renew Holdings.

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Although Renew passes my screening rules, I share Paul Scott’s view that the balance sheet may contain hidden risk and the price tag…

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Disclaimer:  

As per our Terms of Use, Stockopedia is a financial news & data site, discussion forum and content aggregator. Our site should be used for educational & informational purposes only. We do not provide investment advice, recommendations or views as to whether an investment or strategy is suited to the investment needs of a specific individual. You should make your own decisions and seek independent professional advice before doing so. Remember: Shares can go down as well as up. Past performance is not a guide to future performance & investors may not get back the amount invested. ?>


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3 Comments on this Article show/hide all

Techno Trousers 9th Jul 1 of 3
1

Apologies. It was not a 'thumbs down' and was meant to be a 'thumbs up'..... mouse movement at the point of clicking error. :-(

TT

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Carey Blunt 9th Jul 2 of 3
3

I have to admit I kind of like Renew Holdings (LON:RNWH) . I take the point about the balance sheet but they do a lot of work in the Nuclear sector where the barriers to entry for competitors are huge, the revenues are good and projects last many years and so are predictable.

I feel its a slightly different beast to Kier (LON:KIE) . I'm not saying it wouldn't get hit in a downturn but I think it could be more stable than we give it credit for. You don't stop decommissioning a nuclear plant if the economy takes a downturn. Maybe its just a case of finding a good entry point to buy.

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Roland Head 9th Jul 3 of 3

Hi Carey,

Interesting point about Renew Holdings (LON:RNWH) and nuclear work. I'll have to take a closer look to understand more.

Regards,
Roland

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About Roland Head

Roland Head

I'm a private investor, analyst and writer on stock markets, with a particular fondness for free cash flow, dividends and value. My main interests are UK and US stocks. I also have an interest in (profitable) commodity stocks.  I hold the CFA UK Investment Management Certificate (IMC). One of my investment interests is developing rules-based strategies such as my Stock in Focus portfolio. This reflects a significant part of my personal portfolio and is the subject of my weekly column here at Stockopedia. In earlier life, I worked as an engineer in telecoms and IT. The rules-based and quantitative approach required for this kind of work undoubtedly influenced my investing style. I also learned a lot from seeing the tech bubble deflate in 2000-1, when I was working for a very large and now defunct Canadian telecoms firm.  more »

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