Following last year’s car crash result from my Ken-Fisher inspired contrarian screen – the torrid run was exacerbated by Brexit woes – the strategy is back on form.
When I reported on the poor run from the screen last year I made the point that some serious underperformance actually came as something of a relief to me. My reason for this was that the screen had put in such strong results in the preceding four years that I felt some serious 'mean reversion' was a healthy thing, given my belief that screens are never going to provide outperformance year in, year out. Interestingly, a leading quant investor, Rob Arnott of Research Affiliates, has recently been making waves by suggesting that stronger returns could be made from “factor” investing (the vogue industry term for simple screening strategies) by backing proven strategies after periods of poor performance that have made them “cheap relative to their own historical norms”.
Whatever the case, the top five contrarian picks from last year delivered a strong 26.1 per cent total return over the last 12 months compared with 15.9 per cent from the FTSE All-Share.