Consistent Winter Portfolio shines during volatile times

December was a horrific month for global markets, but interactive investors Consistent Winter Portfolio is still significantly outperforming the wider market.

What a stinker 2018 proved to be. After making a number of record highs during the first half of the year, stocks turned tail late summer and conspired to deliver the fourth quarter from hell. The new calendar year has started brightly for interactive investor's pair of winter portfolios, but that won't be reflected in December's ghastly figures.

The FTSE 350 benchmark index fell 3.9% in December and is down 5.9% since our winter portfolios launched at the end of October. The interactive investor Consistent Winter Portfolio is our star performer so far, generating a 4.6% gain for the two months despite a 1.7% decline in December.

It's been tougher for our higher-risk basket of shares – the interactive investor Aggressive Winter Portfolio – which fell 6.3% last month and was down 10.5% for the two months to 31 December. 

However, the two portfolios of five stocks each are here on merit, with statistics demonstrating an impressive track record of generating strong positive returns over the past decade. Indeed, all five constituents of the consistent portfolio have risen every winter (November to April) for the past decade. Even stocks in the aggressive portfolio, where the rules are relaxed slightly to give potential for even higher returns, have each made a profit in nine of the past 10 winters.

Currently, still less than half way through the third month of this six-month seasonal strategy, things are looking much better. A peak at the latest stats (to 9 January 2019) shows the consistent portfolio up 9.7% since launch and the aggressive portfolio down 1.9% versus the FTSE 350 down 3%. More on that next month.

interactive investor Consistent Winter Portfolio

Graph showing performance of ii Consistent Winter Portfolio against the FTSE 350

Source: interactive investor. Past performance is not a guide to future performance

Only two of the 10 constituents across the portfolios generated positive returns in December, and that they were both consistent portfolio stocks helps explain the success of this steady basket of shares.

As all around it struggled, InterContinental Hotels Group (LSE:IHG) rose a fraction under 1% last month, investors appreciative of its defensive qualities. Despite concerns about slowing global growth, this has not shown up in IHG's numbers. Indeed, one analyst just upgraded the shares in a note titled A resilient business model at a fair price, which sums up the broader attitude to the Crowne Plaza and Holiday Inn owner currently.

Our consistent superstar this year has been Hill & Smith (LSE:HILS). The motorway crash barriers firm edged higher in December, taking its overall gain during this strategy to 21% at year-end. It seems 1,200p may prove a level of resistance, but the fundamentals at this mid-cap are sound.

Elsewhere in December, kitchen supplier Howden Joinery (LSE:HWDN) gave up 2.2% and remains the worst-performing 'consistent' stock. However, it has made a slow start in previous years, typically picking up around annual results time late February/early March.

Speciality chemicals giant Croda International (LSE:CRDA) and pubs group Greene King (LSE:GNK) fell almost 4%, but here too, there is reason for optimism. Croda has risen over the winter months for at least the past 14 years, so history is on its side.

Greene King continues to surprise, however. Few who look at the five-year chart believe the brewer could possibly be a winter winner. But it is, and it's set about proving the doubters wrong with a stunning 21% rally in the two months to 31 December.

A strong Christmas update, including a record Christmas Day as Brits ate out to save on the post-feast washing up, reignited interest in the shares. A forward price/earnings multiple of just 9.4 and prospective dividend yield of 5.6% are a real attraction.

interactive investor Aggressive Winter Portfolio

Graph showing performance of the ii Aggressive Winter Portfolio against the FTSE 350

Source: interactive investor. Past performance is not a guide to future performance

It wasn't just US tech stocks like Apple (NASDAQ:AAPL) and Amazon (NASDAQ:AMZN) that racked up double-digit percentage losses in December. 

Concerns around the UK retail sector hobbled trainers-to-tracksuits chain JD Sports Fashion (LSE:JD.), while workspace provider IWG (LSE:IWG)succumbed to fears around the domestic and global economy. Losses in December were 11.7% and 10.1%, respectively. 

US-focused equipment rental firm Ashtead (LSE:AHT) has also remained out of favour, despite decent half-year results, amid concerns of an imminent downturn in the US construction market and weaker economy in general. It fell 6.9% last month.

Elsewhere, heat treatment engineer Bodycote (LSE:BOY) and property website Rightmove (LSE:RMV) each lost just over 1%, down with the market rather than any stock-specific catalyst. However, there are concerns around the former, where it’s feared good progress at the aerospace business could be offset by autos and industrials.

interactive-investor-logo-small-sizeThis article was originally published on our sister website interactive investor.

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