How our winter portfolio rocketed 24% in five months

Five months into the Interactive Investor Winter Portfolio strategy, and returns from our two baskets of shares continue to extend their lead over the benchmark and wider market. In fact, those investors willing to take on extra risk will be sitting on unbelievable profits from this very simple strategy.

Both our Consistent and Aggressive winter portfolios, made up of the best-performing stocks of the past 10 winters, have beaten the market every year since inception in 2014.

Picking them was relatively straightforward. To recap, we employed the services of Stock Market Almanac author and mathematician, Stephen Eckett, to screen the FTSE 350 for share price performance over the six winter months in each year of the past decade.

Our so-called Consistent Winter Portfolio contains the five most reliable FTSE 350 companies during that period – each has risen at least 90% of the time. To make our Aggressive Winter Portfolio, stocks must have a 70% success rate over the winter months.

Investing in the reliable basket of shares for the past 10 years would have netted an average annual profit of 18%. In return for the obvious increase in risk, the aggressive portfolio has averaged annual profit over the past decade of 32%.

High-risk grow 8 times faster in March

Both the FTSE 100 and FTSE 350 rose by 0.8% in March, as investors took another breather after stunning returns since February 2016, but not before making another record high.

Mid-month, the blue-chip index topped out at 7,447 following decent results from high-yielding insurer Aviva, a bounce-back at budget airline easyJet and optimism around housebuilders.

However, rising inflation gave the pound a boost, taking the steam out of the Footsie's army of exporters for whom a weak pound is more desirable. Donald Trump's failure to overhaul so-called Obamacare also benefited sterling, with traders worried the president's other big plans – tax cuts and increased spending – will meet the same fate.

With Theresa May finally triggering Article 50 and at least two years of tortuous Brexit negotiations, investors saw little reason to add to positions. However, any selling was muted and certainly looked at no time like turning into the correction the bears keep talking about.

For our winter portfolios, it was the opposite.

In just one month, the Aggressive Winter Portfolio jumped 6.6%, eight times more than the benchmark FTSE 350 index. That takes the profit for the five months since launch to over 24%. Even the more sedate Consistent Winter Portfolio added 1.2% in March, extending its lead over the market as five-month gains grew to almost 7%.

Aggressive Winter Portfolio

Seems all underperforming workspace provider Regus needed was a change of name to reverse its fortunes. Its share price is up around 30% since the switch of moniker to IWG in December, and February's results underpinned gains.

While the share do not look obviously cheap, they're not expensive either, and management's indication that trading conditions have improved in the first quarter is encouraging. Investors certainly took heart, chasing the shares up 12.7% in March

A tie-up with Sonae in Spain and Portugal could be lucrative for JD Sports, but it wasn't the reason why UK high street sports retailer JD Sports rose by 9.5% in March. With January's bullish trading update still fresh in the memory, investors will be looking forward to full-year results due on 11 April

There were further gains for housebuilder Taylor Wimpey in a month when Interactive Investor's Edmond Jackson said "further upside looks likely while the housing market remains resilient". They jumped by 7.3% last month

Gaming software firm Playtech is easily the worst-performing share in the portfolio, but it has at least clawed by losses and, after a 4% gain over the past four weeks, is now trading at breakeven.

It hasn't been said before this year, but Ashtead brings up the rear, admittedly with only a 3p deficit in March. Third-quarter results early in the month were good enough, and the rental equipment firm will be a beneficiary of tax cuts and potentially massive spending on infrastructure by Donald Trump. Only concerns about the president's ability to get policy past Congress is holding back the shares.

Consistent Winter Portfolio

Irish building materials firm CRH is one of those companies that did spectacularly well after the Brexit vote and subsequent collapse in the value of the pound. However, its shares rose by 2.5% in March, taking its five-month win to 5%.

The month got off to a flying start with a well-received development strategy update and follow-up roadshow, during which chiefs said planned acquisitions could increase earnings per share by 6-11%. Recovery potential in Europe is "sometimes overlooked," reckon analysts at Barclays.

Croda, another of those summer outperformers, was 1.6% better over the month as follow-up buying after full-year results late February continued. UBS still thinks the shares are worth £40, implying 14% upside from current levels.

Elsewhere, platinum high-flyer Johnson Matthey, outperforming heat treatment specialist Bodycote and catering giant Compass all made ground, although upside was less than 1% in each case.

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.