2019 is drawing to a close, and it is worthwhile to reflect on some of the major FTSE 100 players and their performance over the past year. For those sharp readers among us, I should clarify that my figures are drawn from a rolling 12-month period, rather than the start of 2019, but I hope you will forgive me.
So, what can we say for the behemoth Lloyds Banking Group (LSE: LLOY)? Well, with the current share price trading around the 60p mark, up from 56.20p a year ago, this investment would have given you a return of 6.7%. If you had invested £1,000, it would now be worth £1,067 – but, there is more to the story.
Overall market performance
Making £67 from £1,000 is nice, of course, but those numbers on their own don’t tell you much. Is it a good investment or a bad one? Well, one way to tell is to compare it to the return the overall FTSE 100 index this year, which is a fairly damp 3.9%.
When judging the hypothetical Lloyds investment against putting funds into a FTSE 100 tracker fund, we can see that you would have done significantly better with Lloyds. Yet, some would argue that this comparison isn’t a good one, because some sectors have underperformed massively, dragging the index down. For example, supermarkets have had a tough year, with Marks and Spencer falling out of the FTSE 100. Sainsburys and Morrisons are both down double digits on the year too.
Instead, let’s measure up Lloyds against its peers in the finance industry. How have RBS, HSBC, and Barclays performed? Well, if you average the returns from the three mentioned, the figure is -3.2%.
Measure twice, cut once
Now we are getting somewhere! We can conclude from this comparison that the Lloyds share price has performed very well. Not only has it beaten the FTSE 100 index average, but it has also beaten the average return of some other banks in the finance sector.
To keep things from getting too complicated, I’ve kept dividends out of the equation. The figures also do not show the volatility of the stocks mentioned, which some investors who do not want to take on a high level of risk should consider.
2020 and beyond
Having established that the return on your £1,000 in Lloyds has been good, you’ll probably be wanting to know what lies in store for next year. That is a very good question, and while I can’t offer you an answer for certain, I think it could be promising.
The performance of Lloyds is highly correlated to Brexit, which I have written about in more depth here. If we do get Brexit resolved early next year, as the Conservatives are promising, it could provide a boost for Lloyds, to carry on with throughout 2020.
If you ask me, I would hold onto your £1,000 investment, as next year could hold even greater returns.
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Jonathan Smith owns shares in Lloyds. The Motley Fool UK has recommended Barclays, HSBC Holdings, and Lloyds Banking Group. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.