Fundsmith

[bitchstewie]

This is a genuine question not trying to be a smart arse.

When you invest in a fund presumably it's in the hopes that it does well.

So why when it does well would you want to take your money out?

I actually get where you're coming from but it always seems a little perverse.

Maybe look at a graph of how Fundsmith and indexes have performed over time and ask yourself what if you'd done similar at different points in time and then look to the right of that point at what the graph does?

The way it does it varies but over time it tends to always be moving upwards.

[bitchstewie]

mike74 said:

I agree with everything you're saying, it's just the Eeyore in me always expecting the worse and believing something is too good to be true... and hence wanting to skim off and bank my gains and limit any potential future losses, but obviously by doing that I'm also reducing any future gains as well.

Understandable.

To date Fundsmith hasn't given any sleepless nights but who knows what the future might bring with any investment?

Problem is when people go into stuff like Scottish Mortgage or China (many China trusts are down about 8% today alone) and then panic because they didn't quite appreciate what they'd taken on

[bitchstewie]

Hussein-z3ksd said:

For an absolute novice, which broker/platform/other do you suggest to use to invest with FS - or can you invest directly with them?

If you think you're only ever going to want to invest in Fundsmith you can go direct.

With other platforms it depends a little bit on amounts and frequency as to who might be the best choice.

[bitchstewie]

mikeiow said:

Also echoes with my feelings towards "rebalancing". My pension pot is spread around 4 funds - 2 x 'safer', 2 x 'riskier'.
The safer ones are up a little....the riskier ones up somewhat more. From initially being 50:50 split, it is now 40:60.
Do I rebalanced to get back to 50:50?
Maybe.
But as a rule, I have let the 'runners run': only really rebalancing when I have decided to shift the funds - perhaps when adding or subtracting one (maybe an event every 5 years).

Tricky to know!

But (devil's avocado) you're rebalancing you're not just skimming off profits when it gets a bit much and keeping it as cash.

Do that long enough and you're back to "what do I do with all this cash in the bank?" surely?

Also raises the interesting question of whether to "run your winners" assuming you're rebalancing between funds with identical remits i.e. you're not skimming off profits and putting them into Troy Trojan or something deliberately less volatile.

No right answers

[bitchstewie]

xeny said:

Trick with HL is to hold Investment Trusts, shares and ETFs, at which point they're rather more economical.

Being an utter cheapskate, I mostly use iWeb and trade a little less than once a month. Total cost of the year <£50.

The langcat link I posted above is very useful for assessing relative cost, as is https://monevator.com/compare-uk-cheapest-online-b...

iWeb have upped their account opening fee to £100.

If you buy a couple of funds a month you now need a decent amount invested before they're as cheap as they used to be.

[bitchstewie]

xeny said:

£100 opening fee seems significant, but if for example you're looking at a £20/month fee to hold with II Pro, then the cost quickly becomes acceptable. I (unfortunately) moved to iWeb a few years ago during a £200 opening fee period.. I winced a bit but as it was part of a general portfolio/broker rationalisation it quickly saved me money overall.

A couple of funds a month seems an expensive approach compared to alternating them on a monthly basis, or rotating proportionately through them i.e. 1 month in 4 of the one you want to invest 25% in and the other 3 months you invest in the one you want to hold 75 % of?

Yes, your asset allocation will be imperfect, but unless you're investment each month is large compared to what is already in the portfolio, it's very unlikely to have a material impact.

I think it just highlights what a minefield it can be trying to find the best option for a particular set of circumstances.

It's a bit off-topic but I still find it unforgivable that it's so damned difficult to change fund platforms in a timely manner as I know speaking personally that the inertia/drag of doing so means I just stick with HL for now (I think they're several months behind on transfers out and even then they're taking a long time).

Good that we've never had so much choice so cheap but bad that it's still a very archaic process to switch platforms

[bitchstewie]

For those who are in the active camp who else are you putting your money with?

[bitchstewie]

Harry Flashman said:

bhstewie said:

For those who are in the active camp who else are you putting your money with?

I actually run my own trading strategy based in some screens in Stockopedia. It's all momentum stocks with a mix of value and quality diversified by sector.

Bit too brave for me I prefer to delegate to proven (so far and subject to change etc.) fund managers.

Anyone all-in on only Fundsmith?

[bitchstewie]

Is that share price difference purely down to OCF or is it because different classes launched on different dates?

I hold the I class as I figure it makes transferring simpler if I ever choose to.

Sadly Fundsmith and Smithson are two separate platforms if you want to hold directly which is a PITA.

[bitchstewie]

xeny said:

Purely OCF - here's the very first factsheet:https://www.fundsmith.co.uk/media/2q1dypdk/2010-11-fef-fund-facts.pdf

How do you hold Smithson directly? I thought it was via platform only?

Not sure exactly other than there's a login option on the Smithson website that suggests you can do so somehow.

[bitchstewie]

2Btoo said:

I'm not sure what the login option would do but my understanding is that Smithson is set up as a limited company and the shares in the company are traded on the London Stock Exchange. You can check their value using the ticker 'SSON' - here:

https://www.google.com/finance/quote/SSON:LON?sa=X...

This is separate to the set up for Fundsmith whereby you can invest more money in the company just by giving them more money(!) This is called an Open Ended Investment Company, sometimes called an OEIC or 'Oik'.

(A clever person will be along soon to tell me that I am all wrong. Let's wait and hear what they say!)

I hold both already Looking at the Smithson website I think you can buy through their chosen intermediary so it has a nice Fundsmith/Smithson brand on it but you're still buying through the market so not quite sure what the benefit is, especially looking at the dealing charges on the website.

[bitchstewie]

Derek Chevalier said:

It's probably better to benchmark against something that reflects his investing style. You can see how much quality etc has outperformance the broad market over the last decade.

https://twitter.com/hindsightcapllp/status/1427563...
https://www.msci.com/documents/10199/344aa133-d8fa...

I can't find a global quality ETF that gets close over 10 years though i.e. something I could have actually bought without having to DIY.

[bitchstewie]

Yeah it just seems a little rear view mirror when far as I know what Terry did back in 2010 was a bit different compared to what others were doing.

I have a decent chunk in Fundsmith as I'm a fan of what I see as some very plain speaking in language I can understand.

Quite like the irony from that Twitter link when investing in Fundsmith is risky because there's only 30 stocks and there's manager risk but the way invest with hindsight and get similar performance is to invest in 25 stocks that you've chosen yourself

I'm also likely to open a Vanguard account once I decide which way I want to go with some money into passives.

Seems there's room for both approaches.

[bitchstewie]

If there's a permanent rotation into value Fundsmith won't be alone.

You make it sound as if people can't sell a fund in the space of a day if they feel the goalposts have moved a little too much for Fundsmith's (or any other funds) remit.

[bitchstewie]

Derek Chevalier said:

bhstewie said:

If there's a permanent rotation into value Fundsmith won't be alone.

You make it sound as if people can't sell a fund in the space of a day if they feel the goalposts have moved a little too much for Fundsmith's (or any other funds) remit.

Yes, certainly possible, but I'm not sure how successful that type of timing has been historically.

Is that unique to Fundsmith though or is it the same if you're in pretty much anything other than a global tracker?

Otherwise something is always ahead and behind surely.

[bitchstewie]

What do people think of the recent addition of Amazon?

[bitchstewie]

Exchange rate has definitely helped but it's not down to that entirely it's still a decent bump or clawback of share price in the underlying businesses that's done it.

[bitchstewie]

20.32% YTD for the I class accumulation units.

[bitchstewie]

The thing to consider is not just the returns but the nature of the returns IMO.

Fundsmith has done what it's done with remarkably little volatility and without being entirely dependent on the tech giants (look at the S&P without those and it's interesting).

I'm more interested what people might see as a suitable complement or replacement in terms of volatility for that level of return to date.

[bitchstewie]

mike74 said:

It's felt rather frustrating and disappointing for the last 5 or 6 months to me.. creeping up to 670ish numerous times before repeatedly slumping back to the 640's-630's

Be thankful you've not been in many of the Baillie Gifford funds recently.

7% in a day