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The Barron’s 400 Index: January 2021 Performance Summary

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Notice to our readers:

Starting this month, we’re switching from reporting on the performance of our flagship Barron’s 400 Index from a weekly to a monthly frequency. With a lower frequency of write-ups, we expect to gain a better perspective on ongoing market trends and how these might be affecting B400 constituents across sectors, industries and market cap segments. We will continue to report on the performance of both versions of B400: the equally weighted version (tracked by the Barron’s 400 ETF), and the free float market cap-weighted version.

January 2021 Performance

While the broad equity market was in the red for the month, the Barron’s 400 (B400) closed January 2021 solidly in the black. The table below presents the January 2021 total return of B400 together with its performance since the index was last reconstituted and rebalanced on September 21, 2020.

Index Equity Category Total Return
    January 2021 Since Rebalance*
Barron’s 400 GARP 1.71% 24.69%
Barron’s 400 – FFMCW** GARP -0.55% 12.53%
Russell 1K Large -0.82% 15.54%
Russell 2K Small 5.03% 40.14%
Russell 3K Broad -0.44% 16.93%
S&P 500 Large -1.01% 13.83%
Source: MarketGrader Research & FactSet.* The current Barron’s 400 portfolio constituents started trading on 9/21/2020. **Free float market cap weighted.

B400 posted a total return of 1.71% for January bringing its total return since the index was rebalanced up to 24.69%. Meanwhile, the broad market declined in January by -0.44% bringing its total return down to 16.93%. This means that on a total return basis, B400 is currently outperforming the broad equity market by 7.76%.

The performance relative to large cap indexes is even more significant: In January, B400 beat the R1K by 253 basis points and the S&P 500 by 272 basis points. Going back to September 2020, the outperformance increases to 9.15% relative to the R1K and 10.86% relative to the S&P 500. This outperformance speaks to the B400’s investment philosophy which is executed through MarketGrader’s GARP-based stock selection and is implemented semi-annually when B400 is reconstituted and rebalanced. It might be worth noting that the only passive investment strategy that would have posted a better return than B400 over this time period would have been an tactical asset allocation strategy overweighted in small cap stocks.

Since the B400 index methodology equally weights the constituent companies selected into the portfolio at each rebalance, it follows that the top performing companies are also the largest contributors to the portfolio’s performance.

In the month of January, the three top gainers in terms of price in B400 were: National Beverage Corp. (FIZZ) which posted a gain of 78.49%, Acacia Communications (ACIA) with a gain of 56.80% and Quidel Corporation (QDEL) with a price gain of 39.70%.

The three top gainers in terms of price since the current B400 started trading in September are: Zoom Video Communications (ZM) with a price gain 38.88%, Exelixis Inc. (EXEL) with a gain of 28.60% and Meritage Homes Corp. (MTH) with a price gain of 22.83%.

For the longer run and since inception performance of the B400 click here.

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