Anyone familiar with Fundsmith LLP?
Discussion
I read an article in British Airways High life magazine on Fundsmith LLP.
I have never been in the position of investments previously, but having turned 40 and the mortgage being manageable, I thought it might be a good time to invest.
The Fundsmith advert sells itself by talking about investing in small little known companies who sell millions of units a day in the developing world.
Anyone any luck with them?
I have never been in the position of investments previously, but having turned 40 and the mortgage being manageable, I thought it might be a good time to invest.
The Fundsmith advert sells itself by talking about investing in small little known companies who sell millions of units a day in the developing world.
Anyone any luck with them?
I used to work with Terry Smith years ago before he was politely asked to leave our then employer due to writing a book about dodgy accounting practices, which was largely true but unfortunately a number of the companies in question were clients of our employer. This was in the days when research independence wasnt such a highly valued commodity as it is now!
My experience of him was that he was an intelligent but difficult chap. When he started his investment business my wife invested and it is now her largest single investment. Performance has been very good, fees are modest, no performance fees etc. Ive been along to his annual meetings a few times and he talks a lot of sense. My only concern is that the fund has grown massively over the last three years and how scaleable it is. To be fair to him when i asked him that question he pointed out that the market cap of the combined companies in the fund is something like $1trn or some such number (his point being the fund, although now large, isnt always a large investor in the companies he invests in). I have thought about taking some money off the table but really cant imagine anything better to do with it so we are sticking with him. As always, though, i wouldnt put all one's eggs in one basket.
My experience of him was that he was an intelligent but difficult chap. When he started his investment business my wife invested and it is now her largest single investment. Performance has been very good, fees are modest, no performance fees etc. Ive been along to his annual meetings a few times and he talks a lot of sense. My only concern is that the fund has grown massively over the last three years and how scaleable it is. To be fair to him when i asked him that question he pointed out that the market cap of the combined companies in the fund is something like $1trn or some such number (his point being the fund, although now large, isnt always a large investor in the companies he invests in). I have thought about taking some money off the table but really cant imagine anything better to do with it so we are sticking with him. As always, though, i wouldnt put all one's eggs in one basket.
I was invested with them a couple of years back, then ended up falling for the sales spiel of a local financial advisor and ported my ISA over to his company. Whilst it's done OK in that time, I've never been particularly impressed with the layout of the website to manage the fund, nor the company as a whole, so I'm strongly considering moving it all back over to Fundsmith.
There are 2 fundsmith funds:
The original which invests in boring companies which sell boring products that everyone needs. Think unilever/pizza. This has done very well over the last 5 years (3xincrease): https://www.google.ca/finance?chdnp=1&chdd=1&a...
He has a simple three-step strategy: Buy shares in good companies; don’t overpay; do nothing.
I think that it probably counts a bond proxy fund which are a little out of favour with the press
I've been in from the start and I'm pleased.
There is also a newer emerging markets fund which doesn't seem to be performing so well but which Terry Smith claims will outperform the original fund long term.
The original which invests in boring companies which sell boring products that everyone needs. Think unilever/pizza. This has done very well over the last 5 years (3xincrease): https://www.google.ca/finance?chdnp=1&chdd=1&a...
He has a simple three-step strategy: Buy shares in good companies; don’t overpay; do nothing.
I think that it probably counts a bond proxy fund which are a little out of favour with the press
I've been in from the start and I'm pleased.
There is also a newer emerging markets fund which doesn't seem to be performing so well but which Terry Smith claims will outperform the original fund long term.
nyt said:
There are 2 fundsmith funds:
The original which invests in boring companies which sell boring products that everyone needs. Think unilever/pizza. This has done very well over the last 5 years (3xincrease): https://www.google.ca/finance?chdnp=1&chdd=1&a...
He has a simple three-step strategy: Buy shares in good companies; don’t overpay; do nothing.
I think that it probably counts a bond proxy fund which are a little out of favour with the press
I've been in from the start and I'm pleased.
There is also a newer emerging markets fund which doesn't seem to be performing so well but which Terry Smith claims will outperform the original fund long term.
No, this is appears to be a fairly passive equity fund!The original which invests in boring companies which sell boring products that everyone needs. Think unilever/pizza. This has done very well over the last 5 years (3xincrease): https://www.google.ca/finance?chdnp=1&chdd=1&a...
He has a simple three-step strategy: Buy shares in good companies; don’t overpay; do nothing.
I think that it probably counts a bond proxy fund which are a little out of favour with the press
I've been in from the start and I'm pleased.
There is also a newer emerging markets fund which doesn't seem to be performing so well but which Terry Smith claims will outperform the original fund long term.
sidicks said:
No, this is appears to be a fairly passive equity fund!
A “bond proxy” is shorthand to describe equities such as consumer staples and utilities with safe, predictable returns, but have higher yields than much of the bond market (and, crucially, yields which can grow over time).https://www.ft.com/content/1c359352-18f1-11e5-a130...
I don't have investments with his fund but he writes interesting stuff in the FT personal finance section and the funds / strategy seems transparent and sensible.
Given the recent performance of the markets nearly every equity fund will look pretty good of course! (ETA over a year or so at least).
Given the recent performance of the markets nearly every equity fund will look pretty good of course! (ETA over a year or so at least).
I had a lot invested in Fundsmith Equity and did pretty well. My (soon to be ex) IFA recommended that it had reached top and told us to sell last June. It went up another 25% since then...
I like and still hold it in my pension and ISAs. Wish I had not just stayed in but chucked more at it (that was my original plan but IFA persuaded me otherwise).
I like and still hold it in my pension and ISAs. Wish I had not just stayed in but chucked more at it (that was my original plan but IFA persuaded me otherwise).
By all accounts Fundsmith has a good reputation, but I had dinner with Terry Smith a few years ago and whilst selling his management approach he said he would never invest in tech companies. I asked him how that tallied with Microsoft being one of his largest holdings and he replied that he didn't consider Microsoft to be a tech company.
I told him I was pretty sure Bill Gates and everyone else did!
On that basis alone I decided he wasn't a fund manager I could work with.
I told him I was pretty sure Bill Gates and everyone else did!
On that basis alone I decided he wasn't a fund manager I could work with.
JulianPH said:
By all accounts Fundsmith has a good reputation, but I had dinner with Terry Smith a few years ago and whilst selling his management approach he said he would never invest in tech companies. I asked him how that tallied with Microsoft being one of his largest holdings and he replied that he didn't consider Microsoft to be a tech company.
I told him I was pretty sure Bill Gates and everyone else did!
On that basis alone I decided he wasn't a fund manager I could work with.
To be fair, a lot of people in the tech industry would not consider Mircrosoft as a real tech company, there is a lot less innovation coming out of that company these days and they seem to copy ideas rather than come up with their own. I told him I was pretty sure Bill Gates and everyone else did!
On that basis alone I decided he wasn't a fund manager I could work with.
JulianPH said:
By all accounts Fundsmith has a good reputation, but I had dinner with Terry Smith a few years ago and whilst selling his management approach he said he would never invest in tech companies. I asked him how that tallied with Microsoft being one of his largest holdings and he replied that he didn't consider Microsoft to be a tech company.
I told him I was pretty sure Bill Gates and everyone else did!
On that basis alone I decided he wasn't a fund manager I could work with.
So you had dinner with him a 'few' years ago and what has his fund done since then? Oh yes it's tripled in value. Please tell us how the alternate investments you made have done over the same timeframe. I told him I was pretty sure Bill Gates and everyone else did!
On that basis alone I decided he wasn't a fund manager I could work with.
Only then will we be able to decide who knows more about whether Microsoft is a true tech company or not......
sidicks said:
No, this is appears to be a fairly passive equity fund!
sidicks you should know better - this is anything other than a passive fund. It is a concentrated global equity portfolio with just 20-30 holdings. It is entirely index agnostic. I'm not totally sold on "active share" as a metric, but the factsheet reports 93% where a true passive fund would be 0%I'm invested in it in my sipp, about 5% of my total pot. It's doing well, it is now the 3rd most popularly viewed fund on the HL fund research tool, so not exactly a well kept secret. Bernie Madoff was very popular for a while though, I wouldn't put my house on anyone fund or manager.
castroses said:
JulianPH said:
By all accounts Fundsmith has a good reputation, but I had dinner with Terry Smith a few years ago and whilst selling his management approach he said he would never invest in tech companies. I asked him how that tallied with Microsoft being one of his largest holdings and he replied that he didn't consider Microsoft to be a tech company.
I told him I was pretty sure Bill Gates and everyone else did!
On that basis alone I decided he wasn't a fund manager I could work with.
So you had dinner with him a 'few' years ago and what has his fund done since then? Oh yes it's tripled in value. Please tell us how the alternate investments you made have done over the same timeframe. I told him I was pretty sure Bill Gates and everyone else did!
On that basis alone I decided he wasn't a fund manager I could work with.
Only then will we be able to decide who knows more about whether Microsoft is a true tech company or not......
An incredible achievement none the less, I don't deny it. My point was simply that he was not being completely open and has subsequently invested in other tech firms. I couldn't work with someone who said one thing but did another.
FYI my ETF portfolio is well behind this and my direct equity holdings are massively ahead of this.
I take on board the point that Microsoft is hardly a cutting edge tech holding, but it is a software company and firmly a tech company, as is Amadeus IT and SAGE, which between them account for 15% of this fund.
Not that this is a bad thing (on the contrary), but when you are sat with a manager denying he has such holdings it does not instil you with confidence.
JulianPH said:
castroses said:
JulianPH said:
By all accounts Fundsmith has a good reputation, but I had dinner with Terry Smith a few years ago and whilst selling his management approach he said he would never invest in tech companies. I asked him how that tallied with Microsoft being one of his largest holdings and he replied that he didn't consider Microsoft to be a tech company.
I told him I was pretty sure Bill Gates and everyone else did!
On that basis alone I decided he wasn't a fund manager I could work with.
So you had dinner with him a 'few' years ago and what has his fund done since then? Oh yes it's tripled in value. Please tell us how the alternate investments you made have done over the same timeframe. I told him I was pretty sure Bill Gates and everyone else did!
On that basis alone I decided he wasn't a fund manager I could work with.
Only then will we be able to decide who knows more about whether Microsoft is a true tech company or not......
An incredible achievement none the less, I don't deny it. My point was simply that he was not being completely open and has subsequently invested in other tech firms. I couldn't work with someone who said one thing but did another.
FYI my ETF portfolio is well behind this and my direct equity holdings are massively ahead of this.
I take on board the point that Microsoft is hardly a cutting edge tech holding, but it is a software company and firmly a tech company, as is Amadeus IT and SAGE, which between them account for 15% of this fund.
Not that this is a bad thing (on the contrary), but when you are sat with a manager denying he has such holdings it does not instil you with confidence.
I get the feeling that Smith thinks the whole financial industry is BS and has very little respect for those working in it.
He is trying to do something different in terms of his 3 criteria/philosophy as he genuinely believes that the big unit trust providers are ripping people off with the hidden charges of their constant 'churn'.
The only thing we can really judge Fundsmith on is it's track record. Growth of 17.4% annualised since launch. If he can keep that up...........
castroses said:
Growth of 17.4% annualised since launch. If he can keep that up...........
I'm in with Fundsmith very heavily - by far my biggest investment. I'm an investment novice having never done anything more than compare bank interest rates previously but I've now been in Fundsmith for the last 4 years or so. I came across them by various means (not all at the same time) and liked what I read and saw. Since then I've met Smith a few times and can well believe that he is difficult to work with but I don't much care; I'm investing in his strategy, not sitting next to him every day and sharing a water cooler with him. The returns have been excellent. The question about risk is a real one, but the companies he invests in have been around for a very long time and tend to be stable. One of Smith's boasts was that a couple of them have been paying dividends since Queen Victoria was on the 'throne (although I can't vouch for the truth of this). There are only a small number of companies invested in so there is the risk that one of them goes under but I guess that's what you risk when you have good returns. His track record before Fundsmith was good too and I very much like his investment approach; it's simple, and being financially illiterate means I like that.
Fundsmith has been good for me. (By contrast, his 'FEET' fund has been pretty dire - and I'm in that as well). I plan to stay in it for the long haul with it continuing to represent a very large proportion of my investments. However I am not financially savvy and will watch this thread with interest to read other people's opinions about it.
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