After a decent rally in April and something of a sideways pattern in May around the election, June finally saw equity markets crack as the on going Greek tragedy continued to play out. Thus June pretty much saw negative total returns across the board for UK Indices with FTSE 100 being the biggest faller with a -6.64% total return, while the Fledgling index was the only major UK index to provide a positive return of +0.41%. Over the quarter the three main indices FTSE, 350 and All Share all saw negative returns of 4 to 5% or so. While the range of Mid cap and Smaller Indices all saw positive total returns ranging from +1.54% fro Small cap to +7.51% for the Fledgling Index.
Monthly Timing Indicator
Regular readers may remember that I have been tracking a simple market timing indicator based on monthly moving averages for the Main UK indices. As a result of the moves in June a similar mixed picture has emerged on these with the main indices giving sell signals and the Mid Cap and Small Cap indices still saying hold / buy. I guess time will tell if the latest sell off in the larger more liquid stocks spreads down the market cap scale and reverses the recent outperformance by mid and small cap indices. Alternatively the could be another last minute deal for Greece and a subsequent relief rally which would then show the current sell signals to be another case of being whipsawed by these indicators, which is something we have seen in the last year and the main reservation I have about them.
Mechanical Compound Income Scores Portfolio
After two positive months the portfolio suffered its first negative month with a -015% total return, which nevertheless was a respectable 5.59% outperformance of the FTSE All Share. However given the trend for Mid and Small cap outperformance discussed above and the portfolios large exposure to these, this is perhaps not too surprising. Over the quarter since inception the portfolio has returned 7% versus a negative 2.5% from the FTSE All Share so a promising start but clearly too short a time frame to draw any firm conclusions.
At the individual stock level over the month the best performers were Rank, Maintel, Plus500, Character Group and Photo Me. While the laggards were Renishaw, Finsbury Foods, IG Group, Jupiter and Schroders. Since Inception the leaders have been Jupiter, EMIS, Alliance Pharma, ITV and IG Group. The losers have been Plus500, Renishaw, Photo Me.
I'll update the month end portfolio after this post goes live and then get onto looking at the first quarterly re-screening.
Having said it is mechanical, in the sense that it is following the scores, like any portfolio you still need someone to check and implement the trades which can still take a bit of thought and time. So with that in mind I'll report back another day on the changes that I make today.