Stockopedia’s NAPS Portfolio Strategy · Invest & Retire Community

Stockopedia’s NAPS Portfolio Strategy

I saw an interesting video outlining the NAPS (New Automated Portfolio System). Would be interesting to apply to the US stock market.

The NAPS (New Automated Portfolio System) is a mechanical, rules-based stock picking strategy that takes under one hour per year to implement. It’s beaten every UK fund manager over the past decade and has outperformed the S&P 500, growing £100k into over £340k since 2015.

Simple Rules, Superior Results:

The NAPS system is completely systematic, requiring no fundamental research or emotional judgment. Investors sell all positions after one year, regardless of performance or news, eliminating emotional decision-making.

Three Pillars of Success:

Drivers: Picks high-potential stocks using Stockipedia’s proprietary “Stock Rank,” a blend of quality, value, and momentum factors.

Diversity: Selects 2 top-ranked stocks from each of the 10 market sectors to spread risk.

Discipline: Rigidly sticks to the rules—buys, holds for one year, then rebalances—all emotions and stories are ignored.

Step-by-Step Methodology:

Sort all UK stocks by Stock Rank.

Exclude illiquid, tiny stocks (market cap < £20m).

Pick top 2 stocks per sector (20 total).

Buy and hold for 1 year.

Sell everything and repeat—takes less than an hour a year.

Why It Works:

Human investors are prone to biases—holding losers, selling winners, chasing hot sectors, and following compelling stories. NAPS removes all emotion and relies solely on data, outperforming active management.

Impressive Returns & Risk Control:

The system delivered 241% total return (13% annualized) over a decade, compared to just 27% for the FTSE All Share and 193% for the S&P 500. Crucially, NAPS’ annual rebalancing has saved investors from huge losses when former winners crashed.

Beating the Professionals:

NAPS outperformed all 175 UK-focused funds with 10-year records. It had a 57% “hit rate” (profitable picks) and a payoff ratio of 1.91 (average gain nearly double average loss), making it a true compounding machine.

Sector Diversification is Key:

By always holding winners from all 10 sectors, NAPS ensures exposure to whichever areas perform best—since today’s winning sector can be next year’s laggard and vice versa.

Drawdowns & Discipline:

NAPS is not immune to drawdowns—at times it’s spent 7 of 10 years below previous highs and lost 47% during the 2020 crash. Discipline is crucial; checking performance less often increases perceived success and avoids panic-driven decisions.

“Less is More” Philosophy:

The main lesson: simple, systematic investing beats complex, active strategies. By “sitting tight” and only acting once a year, investors harness the power of compounding and avoid costly mistakes. The system’s elegant simplicity is its ultimate edge.https://www.youtube.com/watch?v=5fCyQmQrlH4

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