Economist Burton Malkiel famously quipped blindfolded monkeys throwing darts at the financial pages could pick stocks as well as the experts. It could be said that smart beta, or factor, investing is an attempt to engineer arrows that fly truer. That’s what our best of the FTSE 350 shares portfolio aims to do – by isolating shares’ quality and value characteristics to pick attractive companies in each sector.
Last year, total returns of 25 per cent for the shares selected was ahead of the FTSE 350 index’s 17.3 per cent, although the cash holding diluted overall portfolio performance to 22 per cent. Not enough time has elapsed to read much into results, and 2018 was disappointing, but over three years the annualised rate of total returns has been 9 per cent, versus 7.1 per cent for the FTSE 350 index. Of course, it can’t be ruled out that in 2017 and 2019, the monkey (me) just got lucky.
2019 "Best of FTSE 350" performance (24.01.2019 to 21.01.2020)