Strategies Review Q3 2017 - Momentum And Growth Strategies Lead The Way

3rd Oct '17 by Ben Hobson

3 comments 9073 reads

Momentum, Growth and Quality investing strategies saw the strongest returns in the third quarter of this year - both in the UK, across Europe and in the United States. For the 60 guru-inspired investment strategies tracked by Stockopedia, these are proving to be ideal conditions.

For the first time in over a year in the UK, there were clear winners and losers among the different investment styles. Strategies that chase growth and momentum have outperformed, and saw decent profits in Q3. But value and deep value bargain styles have suffered over the summer.

Index / Strategy Composite	Q3 2017 Performance	12 Months Performance
FTSE 100 (UK)	+0.8 pc	+6.9 pc
FTSE 250 (UK)	+2.8 pc	+11.2 pc
FTSE SmallCAP XIT (UK)	+2.3 pc	+14.0 pc
AIM 100 (UK)	+5.5 pc	+30.1 pc
S&P 500 (US)	+4.0 pc	+16.2 pc
FTSEurofirst 300 (Europe)	+1.8 pc	+12.4 pc
Guru Strategy Composite (UK)	+2.7 pc	+20.5 pc
Momentum Composite	+7.7 pc	+25.7 pc
Quality Composite	+4.3 pc	+17.9 pc
Growth Composite	+3.8 pc	+35.7 pc
Income Composite	-0.9 pc	+14.9 pc
Value Composite	+0.5 pc	+13.1 pc
Bargain Composite	-0.4 pc	+18.7 pc

Market round-up

Before we dive into the latest quarterly performances of the Guru Strategies, it’s worth taking a quick look at the context...

UK markets were pretty flat over the summer. The Alternative Investment Market, the smaller company index closely watched by individual investors, continued to set the pace. The AIM 100 (of the largest stocks on the index) has grown at a faster rate than all the other main indices in each of the past four quarters. AIM’s growth has slowed from the double digit rates we were seeing in Q3 and Q4 last year, but the 5.5 percent gain in the past quarter is still eye-catching. But to put that in context, AIM is only just getting back to where it was in 2008, ahead of the financial crisis.

In the United States, there was a hint of a wobble in August for the otherwise relentless S&P 500. But it quickly bounced back and broke the 2,500 point mark the following month. Some have called this “the most hated bull market in history”, but so far there’s no let-up in a run that now stretches well beyond eight years.

Elsewhere, the FTSEurofirst 300 hit a soft patch in May that saw the index lose value right through…

Unlock with Email

Unlock with Google

Already have an account?
Login here

iwright7

4th Oct '17

Ben,

Interesting overview. In the UK AIM 100 has done well (up +5.5% in Q3 and +30% in 12M). Can you tell if the top preforming Q3 Momentum and Growth composites have more than their "fair share" of UK AIM companies: i.e. Has AIM 100 been driven by Momentum and Growth factors, or are these market beating composites largely reflecting AIM "recovery". Thanks Ian

Logic

It is interesting to note that screens have not been all that useful in the US market. In the UK, it appears to have been partially about picking the right screen (which momentum investors are likely to think was obvious, I suppose). Europe is the market behaving a bit more like I (in retrospect, erroneously) expected, with most screens performing relatively well (although some better than others). Very interesting though, thank you Ben Hobson!

I would be quite interested in comparing some investments screens myself, is it possible to do so?

Also, is it possible to set what currency one would like to see portfolios, charts etc use? This is to strip out (or add in, some would say) the currency effects. I came across an article that stated while S&P500 appeared to have outperformed its eurozone equivalent, this was only true in their respective currencies. If one measured their performance using the same currency, the situation was reversed (think it was in WSJ, some weeks ago). The return on investments overseas does after all depend partially on the exchange rate.

Hecato

Can you please put the market cap indices in black next time? It's very hard to tell it from the short indices when both are in grey.

Strategies Review Q3 2017 - Momentum and growth strategies lead the way

Market round-up

Unlock the rest of this article with a 14 day trial

About the Author

Ben Hobson

3 comments

Unlock the metrics for all these stocks and more...

Unlock the metrics for all these stocks and more...