- Didn't see that coming!
- A negative total return from 2020's eight tips of the year of 5.1 per cent compared with a negative 10.2 per cent from the FTSE All Share
- A cumulative 10 year total return from our tips of the year of 165 per cent versus 77 per cent from the index
As we prepared our tips of the year issue at the end of 2019, we didn’t see Covid coming. With hindsight, it would have been nice to have had much less cyclicality in the portfolio. Particularly hit was laundry business Johnson Service Group (JSG) which does a lot of work cleaning linen for hotels - not the line of work anyone would want to be in during a protracted lockdown.
| Name | Total Return (2 Jan 2020 - 21 Dec 2020) |
| Antofagasta | 54% |
| Phoenix Group Hdg. | 1.0% |
| Relx | -2.8% |
| Speedy Hire | -8.6% |
| Grainger | -9.2% |
| Burberry Group | -17% |
| Porvair | -22% |
| Johnson Service Group | -36% |
| Average | -5.1% |
| FTSE All Share | -10% |
In fact, most of the eight shares highlighted at the start of 2019 had some fairly hefty sensitivity to lockdown, whether that be Burberry’s (BRBY) focus on Chinese consumers and tourists, or the exposure of clean air specialist Porvair (PVR) to the aerospace industry. Even our big data play, Relx (REL) took a Covid hit due to its exhibitions arm.
But that’s the thing with tipping shares over an arbitrary time frame, there’s always plenty of things that come out of the blue - whether due to our own oversight or the fickle hand of fate. That is one of the reasons why in 2021 we are taking a different approach to our New Year ideas hunt.
The one star of the portfolio was copper miner Antofagasta. The electrification and urbanisation trends we hoped would benefit the price of copper have indeed been capturing the market’s imagination in the latter half of the year. Earlier in 2020 the picture was not so pretty with investors given the metal’s reputation as a barometer for global economic health. Indeed, it is quite surprising the reversal in fortune turned out to be so great.
Overall the eight shares did at least manage to beat the FTSE All-Share index. In a year when many of the companies that dominate the index did so badly, that’s hardly a stand out achievement, though. On a cumulative basis the three year return from the Tips of the Year stands at 18 per cent versus a negative 2.5 per cent from the FTSE All-Share, the five year return is an unimpressive 33 per cent which is only marginally ahead of the 32 per cent from the index, while the 10 year return is 165 per cent, a bit more than double the 77 per cent from the index.
