This time last year, UK investors were reeling from a difficult end to 2018. Tumbling equity prices in the final quarter had taken the FTSE All-Share to a two-year low. Growth and momentum strategies were notable losers and we were left wondering whether they’d finally run out of steam after more than a decade of powering market returns.
Fast forward 12 months - to the start of 2020 - and the jury is still out on whether the UK momentum trade is fading. Index prices bottomed-out as 2019 got under way and the market did reasonably well in a pretty unsettling political and economic climate. Overall, it turned out to be a solid year for the 60 guru-inspired investment strategies tracked by Stockopedia. And unlike previous years, we saw much more even set of average performance results across styles spanning Value, Growth, Quality and Income.
Indeed, the UK general election in mid-December (resulting in a large Conservative majority) paved the way for an uptick in gains right across these major styles - laying the foundations for a strong Santa Rally.
About the Guru Strategies
2019 was the eighth full year of Stockopedia tracking the Guru Strategies in the UK, with slightly less performance history for Europe and the United States. Over time, these models have been an interesting gauge of what’s working in the market and how different styles perform in different market conditions.
The models not only show what’s working but they’re also an early indicator of changing market trends. Through the lens of of the gurus, we get to see how different styles of investing - spanning Quality, Growth, Value, Bargain, Income and Momentum - interact with each other.
In terms of the mechanics of Stockopedia’s Guru Strategies, each one has its own set of rules, and we constantly screen the market for companies that meet them. At the end of each quarter, those passing the rules are held in a portfolio for each strategy, which we track. In reality, the models aren’t always realistically investable, and sometimes there may not be many companies that meet their rules. In addition, we don’t account for the drag of trading costs or the bonus of dividend payments in the performance data.
What we saw from the gurus in 2019
Eight years of performance data captures…
