CHICAGO, Feb. 3, 2011 /PRNewswire/ -- As the overall momentum of last year's stock market rally continues this year, it would be key for investors to know which stocks provide the best potential investment options. While no one has a crystal ball to pick winning stocks with, model portfolios often times are a good starting point in the stock selection process to meet an investor's specific risk & return needs. The leading brokerage firms employ analysts who produce recommendations for hundreds of stocks, which can not all be bought for a client portfolio. These brokerage firms then create model portfolios from all of the stocks each firm is following. The process to create these lists range from a bottom up quantitative methodology, to a top down fundamental process.
Twice yearly, Zacks Investment Research ranks the performance of the model portfolios of some of the street's top brokerages. The model portfolios in the Zacks survey include U.S. traded equities including ADRs. Zacks has just released these rankings for the second half and full year 2010. There was marked improvement in the rankings for five out of twelve brokers in the second half of last year.
Taking the top spot in the second half 2010 rankings are BofA Merrill Lynch with a total return of 31.54%, followed by Raymond James in second place with a 30.87% return and Goldman Sachs in third place with a total return of 28.84%. All three firms considerably outperformed the S&P 500, which returned 23.26% in the second half of last year. Also, all three firms made huge advances from their rankings in the first half of the year. "Investments in the technology, financials, retail and oil/energy sectors helped catapult them to the top of the list in the second half," says Tracey Ryniec, Equity Strategist for Zacks.com, the research firm's online unit. "The oil/energy sector had lagged since the 2009 bottom, but suddenly came to life in a big way in the last few months of last year. Being in the oil/energy plus technology sectors also made for a powerful combination."
Many of those ranked in the top 5 for the first half of 2010, remained in that group for the year-end rankings. For the entire year, seven out of twelve brokers outperformed the S&P 500, which returned 15.06%.
The top 12 ranked brokerages for Full Year 2010 (12-31-09 to 12-31-10) are as follows…
Excess Return vs. S&P 500
BofA Merrill Lynch
Morgan Stanley Smith Barney
Zacks complete one-, three-, and five year rankings are available to the media upon request. Zacks calculates the performance of the brokerage "model portfolios" it tracks, on an equal-weighted basis. Total return performance figures include stock price changes, dividends and hypothetical trading commissions of 1% for each addition and deletion to the model portfolios.
The S&P 500 Index is a well-known, unmanaged index of the prices of 500 large-company common stocks, mainly blue-chip stocks, selected by Standard & Poor's. The S&P 500 Index assumes reinvestment of dividends but does not reflect advisory fees. An investor cannot invest directly in an index.
Zacks Investment Research, Inc., developed the concept of the EPS Surprise and created the first quantitative model to predict stock prices based on patterns, estimate revisions and surprises, called the Zacks Rank. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities.
Director of Media Relations
SOURCE Zacks Investment Research, Inc.