Every spring, the financial press dusts off the old City adage: 'Sell in May and go away, come back on St Leger Day.' The idea is that equities tend to underperform in summer. The data is more nuanced than the slogan suggests.

Key takeaways

  • Historical FTSE 100 returns are on average lower in May-October than November-April, but the gap is not consistent year by year.
  • Time in market beats Market Timing for most retail investors (multiple academic studies).
  • Trading costs and CGT can erase any small seasonal edge.
  • Long-horizon ISA investors typically benefit more from staying invested.
  • Tactical adjustments may suit short-term traders but rarely amateur investors.

Where does the saying come from?

The phrase dates back to the 19th century when London traders left for the country season and returned around the St Leger horse race in September.

What does the data show?

Studies of UK Equity returns since the 1960s find a modest seasonal pattern, but Transaction Costs and missed dividends often offset the benefit. The London Business School / Credit Suisse global Investment returns yearbooks have explored this in depth.

Should you actually sell?

For ISA and pension investors with a 10-year-plus horizon, the academic consensus leans toward staying invested. Active traders may use it as one signal among many.

What this means for UK investors

Most UK retail investors are better served by sticking to a long-term plan and ignoring seasonal slogans. If you do want to adjust, doing so inside tax wrappers limits the cost.

Risks to watch

  • Missing Dividend ex-dates by selling early.
  • Triggering CGT in general accounts.
  • Behavioural risk of buying back at higher prices.
  • Overconfidence in pattern-based strategies.