Our portfolios are based on the investment ideas of Benjamin Graham (see ‘Rules of Engagement’ below) and they have certainly withstood the test of time, beating the FTSE All-Share index in 16 out of the 20 years in which we have run them. During that time, they’ve generated an average return of more than 20 per cent in the first 12-month holding period, compared with an average increase of 4 per cent for the FTSE All-Share index.
My 2018 Bargain Shares proved no exception, generating a 12-month positive total return of 12.5 per cent on an offer-to-bid basis and including dividends. By comparison, the FTSE All-Share Total Return index, the index against which we benchmark our annual performance, fell by 4.9 per cent, and the FTSE Aim All-Share Total Return index lost 14 per cent of its value. That’s not to say this investment strategy is a one-way bet – investing rarely is, as the laggard in the 2018 portfolio, currency manager Record(REC), has lost almost a quarter of its value, thus highlighting the benefits of having a diversified portfolio.