Summary +19.13% Year to date, +32.6% 1 Year & +44.2% over 2 years or 19.4% annualized.
Regular readers may recall that I am referring to the Compound Income Scores and the associated portfolio which has now been running for just over two years. For those newer readers who are perhaps unfamiliar with the Scores - these are designed as a way of quickly identifying UK listed equities which are:
Good value, with robust operating characteristics and a yield that is well covered, which has been growing consistently and is forecast to grow in the current year with those forecasts ideally supported by positive estimate revisions. If you want more details about them then please either click the highlighted link above or use the Scores tab in the navigation section at the top of the site.
Now while two years is not a long enough track record to draw firm conclusions, it does at least so far seem to suggest that they have been working well in identifying attractive shares that have characteristics that can lead to good returns, as shown in the graph above. This shows the total return on the CIS Portfolio which has been selected from top decile ranking stocks on the scores. During the first year from April 2015 it followed a quarterly screening process & we also ran an unchanged portfolio for a year by way of comparison, which in the end delivered similar results in the first year. In the second year just finished it moved to a monthly screening process and over the second year this monthly screened portfolio pulled well ahead of the annually re-balanced version. This was probably because the monthly screening enabled it to benefit from opportunities thrown up by the BREXIT vote and it has therefore seen a strong recovery from the BREXIT induced sell off in June 2016.
In 2017 the portfolio has been on a very strong winning streak outperforming the broader market by more than 2% each month in the first quarter. Q2 has got off to an even stronger start with the portfolio being up by 5.78% in a market that was down by 0.37% for an outperformance of 6.15% on the month. This was led by 9 holdings that soared by 9% or more in the month as seems to have been the patterns across the market more generally. Against that there were only 6 stocks which fell by 1% or more. This leaves the portfolio up +19.13% in 2017 to date which compares with +3.64% for the FTSE All Share for an outperformance of 15.5%.
Since inception just over two years ago the CIS Portfolio is now up by 44.2% versus 15.7% for the FTSE All Share index for outperformance of 28.5% in total in just over two years. This performance equates to an annualized return of 19.39% which is towards the upper end of what I have seen on my own portfolios over the years. So while it is good that the performance from the CIS Portfolio has got off to a strong start, I would add the usual caveats about past performance being no guarantee about the future etc. as pride comes before a fall and all that.
However, in addition to comparing the performance of the CIS Portfolio to the broader UK indices I thought it might be interesting to see how this 44.2% gain over two years compares with those produced by the Income guru screens on Stockopedia as shown in the screen shots below. While the 32.6% gain over one year can be compared with the second image, both of which can be clicked to enlarge. If you can't be bothered or can't read the
figures for some reason then the top performing Guru screens on Stockopedia by comparison have done +34.5% over two years and +31.3% over one year. So it seems that the CIS Portfolio has managed to beat all these Guru screens over the both one and two years since it was set up. It is also worth noting that this has been achieved with a full portfolio of 20 to 24 stocks over this period, whereas some of the Stockopedia Guru screens sometimes only have a few qualifiers with some of those being overseas based. So may not be an ideal comparison, but interesting nevertheless.
While comparing this performance to the UK Equity Income Sector in the UK on Trustnet.
I see that the top performers were: +27% over two years, 31.4% over one year, and 14.7% year to date. So it is pleasing to know that by taking an independent, unconstrained approach the CIS Portfolio has been able to achieve better results than both the Guru screens on Stockopedia & all the available UK Equity Income funds too.
Thanks for reading & don't forget if you would like to harness the power of the Compound Income Scores in constructing your own portfolio then click here to read more about them and how you could gain access to them.