Why April has been the best month for UK equities since 1970
Already off to a strong start, here's why investors need to make the most of this winning spring month.
4th April 2019 14:02
by Stephen Eckett from interactive investor
Already off to a strong start, here's why investors need to make the most of this winning spring month.
April is a good month for investors. In fact, since 1970 it has been the best month for UK equities.
Since that year, the FTSE All-Share index has fallen in April in only nine years. The average return for the index in the month since 1970 is 2.6%, which is significantly higher than the average returns for the following two strongest months (December and January), although it must be said that the volatility of returns is also relatively high in April.
In recent years, the market's performance in April has been less stellar and December has replaced it as the strongest month. Since 2000, the average return of the FTSE All-Share index in April has been 2.0%, with positive month returns seen in 13 of the last 19 years. Returns have been modest in the last 10 years, until last year, when the index soared 6%. So perhaps April is getting its mojo back.
The first trading day of April is the second-strongest first trading day of all months in the year. The market then tends to be fairly flat for the middle two weeks, rising strongly in the final week.
Investors need to make the most of April. After this month the market enters a six-month period when equities have tended to tread water (the 'Sell in May' effect). Equities have outperformed over the winter period (November-April) relative to the summer period (May-October) in 17 of the last 20 years.
This is also the strongest month for the FTSE 100 index relative to the S&P 500 (sterling terms); the former outperforms the latter by an average of 1.3% in April.
It's Easter on 21 April, so the London Stock Exchange will be closed on Friday 19th and Monday 22nd. A famous anomaly in stockmarkets is that prices tend to be strong the day preceding and the day following a holiday. This effect is strongest in the year around the Easter holiday.
Past performance is not a guide to future performance
Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.
This article was originally published in our sister magazine Money Observer, which ceased publication in August 2020.
These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.
These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.