While the FTSE 100 had a fantastic fourth quarter, rising by 10.1%, our PIN Fund (a fictional Fund consisting of property-related shares) returned 22.4%. Nearly all of this was due to rising share prices and only Persimmon (more later) paid a small dividend in Q4, equivalent to 2.8% of the share price at the start of the quarter.
Before we look at some companies in the PIN Fund in more detail, it is worth acknowledging that our Fund did still make a loss in 2020. However, to survive a year that included a pandemic and months of unprecedented lockdowns with a total loss to the Fund of £530 (0.25%) is rather impressive, especially considering that the FTSE 100 ended 2020 around 14.5% lower than when it started the year.
As can be seen in the table below, our PIN Fund is now up by more than 108% since its creation just over six years ago. This is an unleveraged return and it also assumes that all dividends are held in cash and not reinvested into buying more shares, which would increase returns further. However, it should also be noted that the Fund would have lost more money this year had we not “bought into the dip” with cash savings from a previous sale of Zoopla shares, and sold Emperic Student Property so we could buy shares in Whitbread instead.
Will the arrival of a vaccine signal “last orders” for the virus?
We are clearly not out of the woods yet, with regards to demoting Covid-19 from economy destroying pandemic to significant pain in the back side, but we are a lot closer than we were 12 weeks ago. At the end of Q3, the arrival of a second wave meant that our PIN Fund made a slight loss of 0.2% that quarter.
The latest arrival to the Fund is Whitbread, which entered at the end of Q2 2020 due to its substantial real estate holdings through its Premier Inn hotel chain, Pizza Hut restaurants, David Lloyd Leisure, and its portfolio of more than 3,000 pubs. The company’s inclusion was a gamble that a vaccine would soon be approved and shares in Whitbread, which crashed by 54% in the first half of 2020, would rebound.
