MCIS Portfolio Month End Report - July 2015

Regular readers will know that MCIS stands for the Mechanical Compound Income Scores Portfolio which I launched back at the start of April this year. This is designed to see how a portfolio based on the Scores would perform if it was just selected "Mechanically" without too much input from myself. Over time this will also enable me to compare it with the returns from my own focussed ISA portfolio and my broader portfolio to see if I should be diversifying less and focussing more on what the Scores are telling me.

As I mentioned at the weekend it has got off to a reasonable start delivering a total return of just under 10% since early April compared to a small negative return from the All Share. This compares to a total return of just over 5% from my ISA over the same period so I guess I would have to say it is Machine 1 – Man 0 so far. I'm not about to throw in the towel or pull the plug however, as my ISA has provided a total return of 15% YTD v 5.5% from the All Share and made 3% in July compared with the 2.5% for the MCIS. So a promising start for the MCIS but it is early days and it really is too short a time period to draw any firm conclusions.

As for July the big winners were a couple of stocks I wrote up last month – Alliance Pharma +31.6% and Finsbury Foods post a reasonable trading update which was up by 16.9%. Aside from those the other top performer this month was Rank which rose buy 8.4% to 245p. This is really annoying as I looked at it personally earlier in the year when it was around 190p, but held off buying in the hope of getting a better entry price. So there is a live example of following the Scores trumping human biases in action.

On the downside it was some of the more expensive stocks which fell back this month with two stocks which now trade on 18x or so, Renishaw (ahead of results at the end of July) and Diploma (no news), which came back by 9.7% and 8.5% respectively. Otherwise the other main laggard was another fullish priced stock, Howden Joinery, which was down by 8% after their Half Year report towards the end of the month failed to excite investors. Interestingly these all still score well on the Compound Income Scores whereas Alliance Pharma and Finsbury Foods after their moves are now closer to falling out of the top quartile and therefore into the sell zone, but I'm getting ahead of myself as we will have to see how they score come the next quarterly review at the end of September.