Winter Portfolio 2016 - winners revealed

Our maiden seasonal portfolios in 2014 did twice as well as the benchmark index. It was tougher last year, but both the Interactive Investor Consistent and Aggressive Winter Portfolios still beat the wider market. We're in no doubt that 2016 could be the most difficult year yet, but if history is any indicator, these 10 stocks have the potential to outperform.

As before, we've teamed up with Stock Market Almanac author and mathematician, Stephen Eckett, to identify the companies which typically do much better during the winter months; it's called the six-month strategy, and is backed up by data stretching back over two decades.

Its beauty is its simplicity. All it requires is that investors buy a basket of shares on 1 November, or late-on in the previous trading session, and sell on 30 April. Buying and holding these portfolios during the winter months only has, historically, generated far better returns than if you had stayed invested all year round.

Trawling the past 10 years of data, we've again chosen the five most regular outperformers for our consistent portfolio. Investing in this basket of shares for the past 10 years would have netted an average annual profit of 18%. The FTSE 350 benchmark index averaged just 3.7%.

Most of our portfolio stocks have fallen in summer and risen in winter for the last 10 yearsAgain, we've relaxed the rules slightly for our aggressive portfolio, although we still require gains in a minimum seven of the past 10 years. In return for the obvious increase in risk, the average annual profit over the past decade soars to 32%.

And this year's portfolios are a truly seasonal bunch. Research shows the majority have, on average, actually fallen over the summer for the past 10 years, then risen during the winter months.

To buy the Interactive Investor Winter Portfolios, click here.

While the method for picking our seasonal winners remains unchanged, market conditions have been unusual this year. Following a spectacular post-EU referendum plunge, the FTSE 100 staged an even more incredible rally. It recently traded almost 800 points above its pre-vote level, and currently sits around 12% higher than at the end of April.

A slump in the value of the pound against the major currencies, specifically the dollar and the euro, has had a big impact on this year's winter portfolio constituents. Demand for reliable businesses, which typically generate much of their revenue overseas, has seen many popular stocks soar and created a divide between pro-Brexit and anti-Brexit shares. Our consistent portfolio is up an average of 16% since April, and the aggressive portfolio 9%.  

What's more, the six-month strategy is book-ended by a US presidential election just days after the winter portfolios are launched, and triggering of Article 50, promised by the end of March. Either of these events, and any number of unknowns in between, could seriously affect the outcome.

Interactive Investor Consistent Winter Portfolio 2016/17

There are some familiar names in the Consistent Winter Portfolio this year. Croda has appeared since inception, so we know it's actually risen in each of the last 12 winters. Both Irish building materials giant CRH and catalytic convertor developer Johnson Matthey have risen 11 years in a row.

Ashtead and Regus are both relegated from the consistent portfolio, their punishment for posting losses last winter. They're replaced by Bodycote and Compass.

Bodycote supplies coatings and heat treatment services to the big car makers and aircraft manufacturers. Compass keeps millions of workers and school kids well-fed. The caterer, one of the world's largest, also makes money providing professional reception staff and night-time office cleaners.

Interactive Investor Aggressive Winter Portfolio 2016/17

It's as-you-were for this year's Interactive Investor Aggressive Winter Portfolio. All five stocks that appeared in 2015 keep their place, including Ashtead and Regus. Despite losing their spot in the consistent portfolio, their record of winter returns is impressive and they're still near the top of the pile.

After a poor winter 2015/16, Ashtead had a stunning summer when typically it loses ground. Up 40% since the spring, investors will hope its share price will benefit further from management's aggressive expansion strategy and still-modest valuation multiple.

It will also be interesting to see if Regus can return to winning ways. Historically, its shares underperform over the summer, averaging a 6% annual decline over the past decade. Was last year's weak winter a one-off?

There was little chance of last year's star performer JD Sports missing out. The tracksuits-to-trainers chain ended the 2015/16 six-month strategy up over 29%, taking its winning streak to four consecutive winters. However, JD didn't stop on 30 April. Between then and now, the shares have soared a further 27% to a record high. Can it really keep going?

While Playtech has also done well over the past six months, Taylor Wimpey and Regus have not. Of course, the EU referendum has been unkind to the housebuilders, and a recovery attempt has stalled.

Please be aware of the risks involved. Past performance of the underlying constituents is not a guarantee of future performance. The value of investments, and any income from them, can fall as well as rise so you could get back less than you invest. These portfolios are designed for a short trading period so market fluctuations may be more pronounced. If in any doubt, please seek advice. If you buy the portfolio the holdings will not be automatically sold on 29 April.

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This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.