December and April have been the two best months for performance on the FTSE over the past 47 years and the FTSE AllShare index has risen in December for 74% of all years since 1970, with an average monthly return of 2.1% (Stephen Eckett, Money Observer, November 2017). Also, the volatility of returns has been lower in December than in any other month over the same period.
The "Sell in May" effect (the belief that during the summer period it's best to hold cash rather than participate in the market) could be a contributor to this strength of equities from the November to April period. The month of December is then an obvious beneficiary of this effect, falling two months into the designated buying period.
The "Santa Rally" tends to make the last two weeks in December the strongest period in the whole year, with the first two weeks in December generally being quite weak by comparison. The FTSE All Share has been in positive territory for 8 out of the last 10 years for the December period (Yahoo Finance, viewed 04/12/2017).
While equities are generally strong in December, income investors generally receive coal in their stockings as only five members of the FTSE 100 index paying dividend payments during the month (Stephen Eckett, Money Observer, November 2017).
It's important to be positioned correctly in order to take advantage of the above factors, with an investment portfolio that could allow you to take advantage of the potential gains at the end of the year.
Westminster Wealth Management offers you the ability to potentially take advantage of the above factors with a strategy in line with your needs and objectives. Contact us today to put your personal strategy in place.
The value of investments and income from them may go down as well as up and you may not get back the original amount invested.
Information is based on our current understanding of taxation legislation and regulations which is subject to change.
The stock market in December: will santa rally push FTSE 100 towards 8,000?