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A Turbulent First 3 Months For The Euro PIN Fund - Q3 2020

Peter Hemple, looks at how our fictional PIN Euro Fund performed in the third quarter

Given the task of creating a fund that consists of property-related companies listed in the Eurozone, half way through a once in a generation pandemic, you could say that I was on a “hiding to nothing.” However, with a total loss in our first full quarter (end-July to end-October) of 7.1% it is fair to say that things could have been a lot worse. As a comparable, the FTSE 100 fell by 5.4% during the same period and, looking back to the end of July, I have to admit that, like many others, I had become complacent about Covid-19.

Without wanting to dwell too long on the virus, as we are all pretty sick of being bombarded with numbers every day, it is worth reflecting on the combined cases and deaths for the five largest countries in the EU (UK, Germany, France, Spain and Italy) in the week leading up to the end of April, the end of July (when we started this fund), and the end of October.

Cases in the week to 30/4: 80,000 - Deaths in the week to 30/4: 13,850
Cases in the week to 31/7: 35,000 - Deaths in the week to 31/7:      270
Cases in the week to 31/10: 853,000 -     Deaths in the week to 31/10: 6,550

From the figures above, it is clear that, despite deaths falling by 98% in the three months to the end of July, we are now definitely experiencing a second wave. However, there are two other possible conclusions from these figures. Firstly, as cases are now 10 times higher than in April, and due to the lag effect between infections and deaths, we could be about to see the death toll soar across Europe. The alternative conclusion is that, due to the inability to get a test back in April, if the death rate is currently half what it was in April then the big European countries could have had actual infection rates of around 1.7m per week back in April, with only around 5% of those able to get a test, most likely while checking into hospital with breathing difficulties.

While we all obviously hope the latter conclusion is correct, it is also very possible that it is the right conclusion. The British Medical Journal released a study at the end of October that looked at the Risk of hospital admission with coronavirus in healthcare workers and their households. The study looked at almost 160,000 healthcare workers and 230,000 household members in the UK and found that, while the risk of admission to hospital for healthcare workers was 15-20%, due to the higher viral loads they were exposed to (doing their underpaid jobs that we will be forever grateful for and let’s hope they get sufficient pay rises at the end of all this), the actual hospitalisation rate for household members was…5%.

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