A volatile summer but faithful UK equity investors could be 10% better off¹

Darius McDermott 12/09/16 in Investing in the UK

Back in April, we asked FundCalibre visitors if they would be following the St Leger’s Day adage to “sell in May and go away”. Just 7%² said that they would, which means 93% could be better off, as the FTSE All Share rose 9.92% between 1 May and 10 September¹– the day of the St Leger’s Day race.

The St Leger’s Day adage dates back to the time when stock market traders either spent the summer on holiday or attending social or sporting events like Wimbledon and Ascot. As a result of less trading, any sudden market sell-offs were amplified. Therefore, it was suggested, investors were better off selling their holdings in May and investing again on St Leger’s Day in September.

However, looking back over the past 35 years, this year’s positive returns are not unusual: the UK stock market has produced positive returns in 24 out of the past 37 years³ suggesting the adage, like the horses in the St Leger’s Day race, has run its course.

Investors in the top five performing Elite Rated UK equity funds would have fared better, had they held on to their investments.

Top five Elite Rated UK Equity funds from 1 May 2016 to 10 September 2016

  1. Liontrust Special Situations: +13.42%
  2. Jupiter UK Special Situations: +12.94%
  3. Old Mutual UK Alpha: +10.60%
  4. R&M UK Equity Long Term Recovery: +10.56%
  5. L&G UK Alpha: +10.45%

And investors who held their money outside of the UK would have seen their returns enhanced further, perhaps proving that trying to time the market can be extremely costly.

Top five overall Elite Rated funds

  1. JOHCM Asia Ex Japan: +28.51%
  2. BlackRock Gold & General: +26.31%
  3. First State Greater China Growth: +26.05%
  4. Goldman Sachs India Equity Portfolio: +25.80%
  5. AXA Framlington Global Technology: +24.99%

¹Source FE Analytics, total returns for the FTSE All Share, 1 May 2016 to 10 September 2016.
²Based on feedback from 158 FundCalibre visitors from 1 April 2016 to 30 April 2016
³Source: Fidelity, total returns for the FTSE All Share between 1st May and 1st September each year since 1980.

This article is provided for information only. The views of the author and any people quoted are their own and do not constitute financial advice. The content is not intended to be a personal recommendation to buy or sell any fund or trust, or to adopt a particular investment strategy. However, the knowledge that professional analysts have analysed a fund or trust in depth before assigning them a rating can be a valuable additional filter for anyone looking to make their own decisions. Past performance is not a reliable guide to future returns. Market and exchange-rate movements may cause the value of investments to go down as well as up. Yields will fluctuate and so income from investments is variable and not guaranteed. You may not get back the amount originally invested. Tax treatment depends of your individual circumstances and may be subject to change in the future. If you are unsure about the suitability of any investment you should seek professional advice. Whilst FundCalibre provides product information, guidance and fund research we cannot know which of these products or funds, if any, are suitable for your particular circumstances and must leave that judgement to you. Before you make any investment decision, make sure you’re comfortable and fully understand the risks. Further information can be found on Elite Rated funds by simply clicking on the name highlighted in the article.

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