Nifty Thrifty Portfolio
The concept behind the Money Observer Nifty Thrifty portfolio is based on the US Nifty Fifty – the 50 shares that investors flocked to in the late 1960s and early 1970s, before the market crashed in 1974. Unlike the Nifty Fifty, however, our Nifty Thrifty portfolio is built using far sounder investment principles.
Over the course of 12 months Money Observer columnist Richard Beddard picks 30 companies from the largest 350 UK-listed companies by market capitalisation, using an algorithm that assesses three key criteria: value, as measured by the earnings yield; profitability, measured by return on capital; and financial strength, measured by Piotroski’s F_Score.
The sole qualitative measures employed are to check that the portfolio is not over-exposed to a single market sector, and to exclude banks, insurers and investment companies.
The objective is to outperform a FTSE All-Share exchange traded fund over any five-year period. The portfolio is reviewed every three months in Money Observer. Shares held for a year are reassessed to ensure they continue to meet the criteria.
IIn the 19th quarterly update, in March 2014, eight shares were due for ejection, although Carillion remains as it is sufficiently highly ranked by the algorithm to be selected again. BHP Billiton, EnQuest, British American Tobacco, Debenhams, Interserve, Unilever and KCOM leave the portfolio.
Three replacements are new to the portfolio: Indivior, PayPoint and John Wood. Afren, WH Smith, Pace and WS Atkins are reinstated. See the quarterly update for details.
The portfolio values below account for stamp duty and the £10 dealing charge levied by our sister website Interactive Investor. The current valuations do not account for dividends, which are recognised when a holding is ejected from the portfolio.
You can view the most recent Nifty Thrifty update here.