There is less than a month to go before this year’s Shares4Schools competition draws to a close and it is anyone’s guess who will win. There is just £200 separating the top five schools as the spring’s turbulent trading conditions take their toll on some of the leaders.

Schools with exposure to cyclical parts of the market had stolen a march on their rivals, but concerns about the impact of slowing Chinese growth, the sustainability of the US economic recovery and valuations ascribed to some technology and biotechnology shares have weighed heavily. These events serve to remind students of the importance of both valuation and market psychology.

Political risk

Tensions in Ukraine and Russia have also tripped up several contenders. Oil giant BP (BP.) has been a popular pick, no doubt for its recovery potential, but it has underperformed since the markets peaked in late February. This is not what you would ordinarily expect from a classic defensive counter but is fully understandable in light of the FTSE 100 firm’s 19.8% stake in Russia oil play Rosneft (ROSN). Even if Russia’s annexation of Crimea has not prompted the violent market sell-off some had been forecasting, it has severely impacted the valuation of Russian assets. Investors have assessed the implications of the country’s growing isolation on the international stage and the possible resurgence in Cold War-era hostilities between the East and West.

The 3% retreat in BP from its year-to-date high of 508p (25 Feb) compares to a 2.4% decline in the FTSE All-Share over the same period, while a feeble showing from the banks has done even more damage. Lloyds Banking (LLOY) Barclays (BARC) and ITV (ITV) are the three most popular stocks (see ‘2013/14 contest profile’ below) and all are doing badly, as if to demonstrate the dangers of having high exposure to cyclical names when markets turn tricky. All three have fallen by more than 10% from their year highs and some teams have been caught out by unwittingly making what were consensus trades.

All three stocks looked like logical picks, given the UK economy’s gathering momentum. But Helal Miah, investment research analyst at The Share Centre, explains how a strong pound is beginning to work against many of the FTSE 100’s internationally diversified names which are core holdings within Shares4Schools portfolios. For those wondering about how they should position their portfolios running into the contest’s closing weeks, he comments: ‘We expect further sterling appreciation in the coming quarters and therefore expect the more UK-focussed companies, generally small to mid-caps, to fare better than the FTSE 100.’

2013/14 contest profile

Sector preferences

• Most popular: General Retailers

• Least popular: Chemicals

Top purchases

• ITV (ITV)

• Lloyds Banking (LLOY)

• Barclays (BARC)

Holding pattern

• Most portfolios hold three stocks

• One portfolio holds 24 stocks

• Nine portfolios hold just one stock

Source: The Share Centre