Lessons from Ed Croft from the NAPS Portfolio

Last week I watched a webinar from Ed Croft of Stockopedia on the results of the NAPS portfolio he has been running for the last 8 years, and the lessons to be learned from it.

The NAPS portfolio is so named because it is based on a “no admin portfolio system” using a ranking system to select stocks based on the three main factors of quality, value and momentum. I am a Stockopedia subscriber but I do not follow the NAPS system religiously.

How did Ed’s portfolio perform last year? In summary a return of -15% although it produced +28% in the prior year. The system does tend to focus on growth stocks like my own portfolio whereas the market preferred lumbering value stocks last year. The average over the last 8 years puts it well ahead of the FTSE AllShare though.

There is much you can learn from Ed if you watch the webinar here: https://event.webinarjam.com/replay/47/ylknwbq0i8wt00otwlz

He does an interesting analysis of the benefits of diversification. He says “holding 20+ stocks in a 90+ranked portfolio reduces the risk of outlier downside performance and increases the probability of holding big winners”. I always knew that a large portfolio was beneficial!

Roger Lawson (Twitter: https://twitter.com/RogerWLawson )

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