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Top Stocks is not a portfolio, but it's a great tool

Why we think Citywire Top Stocks is exciting. 

 
Top Stocks is not a portfolio, but it's a great tool

It was great to see the Financial Times write about Citywire Top Stocks at the weekend. Following what the best fund managers are doing has always been a key tenet of Citywire, and it’s good to see the message getting a wider airing.

However, there was just one aspect of Matt Vincent's article I wanted to clarify. We are not presenting Top Stocks as a portfolio. I totally agree with the advisers quoted in the FT Money article who say dealing costs and tax would make buying all 37 stocks prohibitively expensive.

That said, I must admit we did consider presenting it this way early on in the project. This is because we noticed that the compilation of top 10 holdings from the five fund managers did beat the FTSE All Share. For example, our back testing shows that from 30 September 2008 to 31 August 2011 Top Stocks gained 16.35% compared to 6.91% from the FTSE All Share.

However, I stress that performance is theoretical and could not be achieved by a private investor who would bear dealing costs and stamp duty.

What we are doing is presenting Top Stocks as a generator of investment ideas. Even if many of the companies are familiar to you, I think you’ll find it fascinating to see that GlaxoSmithKline (GSK.L) is so widely held by our panel of fund managers; or that Weir (WEIR.L) is the top holding of Nigel Thomas’s AXA Framlington UK Select Opportunities; or that GKN (GKN.L) is the biggest position in Edward Legget’s Standard Life Investments UK Equity Unconstrained fund.

Of course the timing of our launch could have been better. You couldn’t imagine more volatile or stressed out markets as the eurozone crisis peaks. We had no control over that, obviously. Anyway, you could argue – I know many of you do – that this is precisely the time to be looking for investment opportunities, when so many investors are scared. Things look very bad right now but sentiment could improve rapidly if a solution to the debt crisis is solved soon. In this respect it is interesting that Top Stocks guides you to some of the FTSE giants, like Glaxo and Shell, which have strong balance sheets and pay good dividends and as a result look resilient in times of trouble.

What Top Stocks doesn’t do is tell you whether any of the shares are worth buying. It simply shows what stocks the five managers have in their top 10, many of which will have been long-term holdings.

This is where our editorial coverage kicks in. For me, one of the most exciting things about Top Stocks is the chance it gives us to focus our coverage and analysis on stocks we know to be significant. This is our form of ‘data journalism’. Each day we will provide a digest of Top Stocks news and highlight analysts’ comments on the companies too. We’re looking forward to hear your comments and opinions too.

8 comments so far. Why not have your say?

sgjhaghsdg

Sep 26, 2011 at 12:15

Fees depend on the size of the chunks and stamp duty on how long you intend to hold. Drop £2k onto each stock, and hold for at least six months, and you're beating the AMC of the fund managers.

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Orlando Furioso

Sep 26, 2011 at 13:03

Those of us with long memories remember a unit trust fund in the mid-90's called the 'Hi-5' fund. Yes, the top five stocks chosen by the fund manager. It worked OK for a time and then bombed and disappeared... Ho, hum. Plus ca change, plus c'e la meme chose, perhaps...

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sgjhaghsdg

Sep 26, 2011 at 13:12

Did "Hi-5" really have a portfolio of just 5 shares? Well risky!

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Stephen Lee

Sep 26, 2011 at 13:58

I remember the Johnson Fry Hy-5 and, I seem also to recall, the Hy-1. The former comprised the top5 dividend yielders of the FT30 but it excluded the highest price share. It worked for a while but was fraught with takeover difficulties I seem to remember. I held it in a PEP and the Hy-1 in a single company PEP. the latter did reasonably well.

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john barker

Sep 26, 2011 at 19:26

I notice that these 'top stocks' have been held for a long time by most fund managers -- Woodford particularly has a very low stock turnover, which in addition to reflecting his convictions, also keeps trading costs to a minimum.

How I wish that everyone adopted this approach, investing for the long term growth in variable market conditions.

Given the extreme share price fluctuations we see, every time some issue of 'market sentiment' breaks cover, who is making the deals?

The daily round of share/futures trading by the City 'pros' plays havoc with my long term financial investments; we don't stand a chance really, do we.

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Bob M

Sep 27, 2011 at 10:21

Clearly a useful source of ideas but is there a danger that investing in these companies is too late and that their popularity will be reflected in an already increased share price? Obviously the risk of this will be greater for smaller companies.

For those of us who largely follow the investment trust route and hold for the long term a similar facility showing the most popular investment trusts held by fund managers would be equally useful.

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Rich Harris (Citywire)

Sep 27, 2011 at 16:46

Bob M - I like that idea, it's got us thinking! No idea how feasible it would be but consider it added to our development wishlist.

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Bob M

Sep 28, 2011 at 11:41

Rich Harris - Thank you.

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