Am I doing the right thing - Lindsell Train Global Equity

[ukwill]

Anyone in those funds for 3yrs would have made a majorly healthy return. So yes, I imagine they’re happy. Anyone in Woodford over the same term is negative, so I doubt they’d be similarly happy.

[bitchstewie]

Derek Chevalier said:

ukwill said:

I would imagine that most people invested in Fundsmith and LTGE are relatively happy with their returns.

As I'm sure people were with Woodford.

Do you think people being unhappy with Woodford are being impatient and not realising investing is a long game, or do you think he's lost some of his mojo?

[bitchstewie]

lockhart flawse said:

I also have a fair holding in both Fundsmith and LTGE. Question now is whether they will continue same level of performance and the answer is often no but I see no reason right now to take anything out of either. I invested in Smithson when it opened last year which complements the other two and am interested in Blue Whale.

Which is where I am.

I have some in Blue Whale too, a smaller amount, but it's one I'm keeping a close eye on.

It does bounce around a bit but there's a recent article that has Yiu's view on that and that you have to look at the holding timescale if you're being sensible

https://www.trustnet.com/news/7454139/blue-whales-...

[Mr Pointy]

Derek Chevalier said:

lockhart flawse said:

I also have a fair holding in both Fundsmith and LTGE. Question now is whether they will continue same level of performance and the answer is often no but I see no reason right now to take anything out of either. I invested in Smithson when it opened last year which complements the other two and am interested in Blue Whale.

Do you understand, and are happy with, how they derive their returns? Manager skill/alpha is unlikely to be the answer

Could you explain how they have made their returns & why this is not likley to produce similar results in the future (if you think that is the case)?

[Derek Chevalier]

Mr Pointy said:

Derek Chevalier said:

lockhart flawse said:

I also have a fair holding in both Fundsmith and LTGE. Question now is whether they will continue same level of performance and the answer is often no but I see no reason right now to take anything out of either. I invested in Smithson when it opened last year which complements the other two and am interested in Blue Whale.

Do you understand, and are happy with, how they derive their returns? Manager skill/alpha is unlikely to be the answer

Could you explain how they have made their returns & why this is not likley to produce similar results in the future (if you think that is the case)?

If you accept the fact that markets are broadly efficient and to achieve an edge (when everyone else has access to the same information, employees with the same intelligence and the same computers to crunch the same data) is nigh on impossible, true alpha is incredibly difficult to come by.

https://www.amazon.co.uk/Incredible-Shrinking-Alph...

Fund managers can give the appearance of beating the market by tilting towards certain factors (the returns of which, like the market, cannot be predicted), take concentrated bets on sectors regions etc.

Do you really think Woodford lost his mojo or was it more likely the factors upon which he based his returns underperformed after a long period of outperformance?

An interesting doc worth reading - search google for ""Thinking Alternative - AQR Capital Management" woodford"


"The fund’s significant positive alpha becomes statistically insignificant when controlling for the same investment styles we used for Woodford. These factors are constructed from a broader universe to match Fundsmith’s investment policy"


Again worth emphasising that performance chasing doesn't tend to work

https://www.fa-mag.com/news/u-s--investors-lost-tw...

[lockhart flawse]

Form is temporary abut class is permanent supposedly. My understanding has been that Woodford took a big punt on the UK stock market when he decided that Brexit would not be as bad as everyone was saying. Unfortunately for him the prolonged uncertainty has kept British stock valuations down for much longer than he anticipated. But I was surprised when I found out how far his Woodford Fund has deviated from the Invesco Perp portfolio but it might come good eventually. I have about £8k in my pension but not inclined to put anything more into it and I am looking to exit from the Patient Capital Trust as well.

It's not easy but my instinct is that buying good companies and sticking with them should, all else being equal, provide long-term above average returns. Which is all I am after.

[Derek Chevalier]

lockhart flawse said:

but my instinct is that buying good companies and sticking with them should, all else being equal, provide long-term above average returns.

If the above were true, that would imply there was free money on offer - a simple strategy being to buy the good companies (go long) and sell (short) the bad companies and pocket the difference in returns.

Such a strategy would've been arbitraged to death at least 30 years ago.

[FredClogs]

Derek Chevalier said:

If the above were true, that would imply there was free money on offer - a simple strategy being to buy the good companies (go long) and sell (short) the bad companies and pocket the difference in returns.

Such a strategy would've been arbitraged to death at least 30 years ago.

Isn't that case though, isn't that what a market is, one giant arbitrage played out by imperfect human judgments and to imperfect human timescales?

Isn't the whole Buffetology style the most successful in the long term? Certainly done ok for him.

[FWIW]

https://www.amazon.co.uk/Millionaire-Teacher-Wealt...

[Derek Chevalier]

FredClogs said:

Derek Chevalier said:

If the above were true, that would imply there was free money on offer - a simple strategy being to buy the good companies (go long) and sell (short) the bad companies and pocket the difference in returns.

Such a strategy would've been arbitraged to death at least 30 years ago.

Isn't that case though, isn't that what a market is, one giant arbitrage played out by imperfect human judgments and to imperfect human timescales?

Isn't the whole Buffetology style the most successful in the long term? Certainly done ok for him.

If there were arbitrage opportunities, it's unlikely to be the fund managers able to take advantage of it. Look to stat arb hedge funds for that.


Depends what you mean by Buffet style - his tilt towards the value factor may have led to underperformance over the last decade.


https://www.cnbc.com/2018/08/30/discipline-a-key-r...
https://www.irishtimes.com/business/personal-finan...

[Derek Chevalier]

FredClogs said:

Derek Chevalier said:

If the above were true, that would imply there was free money on offer - a simple strategy being to buy the good companies (go long) and sell (short) the bad companies and pocket the difference in returns.

Such a strategy would've been arbitraged to death at least 30 years ago.

Isn't that case though, isn't that what a market is, one giant arbitrage played out by imperfect human judgments and to imperfect human timescales?

Isn't the whole Buffetology style the most successful in the long term? Certainly done ok for him.

If there were arbitrage opportunities, it's unlikely to be the fund managers able to take advantage of it. Look to stat arb hedge funds for that.


Depends what you mean by Buffet style - his tilt towards the value factor may have led to underperformance over the last decade.


https://www.cnbc.com/2018/08/30/discipline-a-key-r...
https://www.irishtimes.com/business/personal-finan...

[98elise]

98elise said:

Stuart1961 said:

I moved my largest investment, representing c20% of my savings and being part of my pension from an Old Mutual Fund to Fundsmith in 2015 and have seen it grow by 50+% in less than two years. With hindsight I wish I had moved it a year or two earlier and didn't invest more but then that's hindsight !

I did a lot of research into Fundsmith and Terry Smith's investment strategy being similar to that of Warren Buffet and am a strong believer of Fundsmith; a relatively small number of companies with an excellent track record.

Thanks for posting that. I may add Fundsmith to my SIPP as I need to diversify more.

Quoting my own post to say I did add Fundsmith, my SIPP is now

25% Lindsel Train Global Equity
17% Fundsmith Equity
17% Newton Global Income
17% Rathbone Global Opportunities
17% Standard Life Global Smaller Companies
7% Cash

LTGE continues to perform well, but Fundsmith has also done well since I bought in so I'm thinking of increasing my holding to 25%. Are there any other star performers I should be considering?

[Unexpected Item In The Bagging Area]

I’ve just switched the last bit of money I had in Woodford (£11k) into Fundsmith as it’s out performing LTGE at the moment. I hung on to Woodford for a long time in case things improved but it’s not happened of course.

[Derek Chevalier]

Unexpected Item In The Bagging Area said:

I’ve just switched the last bit of money I had in Woodford (£11k) into Fundsmith as it’s out performing LTGE at the moment. I hung on to Woodford for a long time in case things improved but it’s not happened of course.

Buy high, sell low

[Unexpected Item In The Bagging Area]

Define ‘high’ and ‘low’, Derek.

[bitchstewie]

Unexpected Item In The Bagging Area said:

Define ‘high’ and ‘low’, Derek.

Good luck with that one.

[Unexpected Item In The Bagging Area]

[Derek Chevalier]

bhstewie said:

lockhart flawse said:

I also have a fair holding in both Fundsmith and LTGE. Question now is whether they will continue same level of performance and the answer is often no but I see no reason right now to take anything out of either. I invested in Smithson when it opened last year which complements the other two and am interested in Blue Whale.

Which is where I am.

I have some in Blue Whale too, a smaller amount, but it's one I'm keeping a close eye on.

It does bounce around a bit but there's a recent article that has Yiu's view on that and that you have to look at the holding timescale if you're being sensible

https://www.trustnet.com/news/7454139/blue-whales-...

Blast from the past - saw this recently (always good to see "star fund manager")

https://www.marketwatch.com/story/heres-why-a-star...

Interesting quotes in your link.

“Last year the fund was up 8.6 per cent and the market [MSCI World index] was down by 3 per cent: the peer group, embarrassingly, was down [almost] 6 per cent,” said Blue Whale Capital founder Stephen Yiu."

"In a down market we outperformed and part of the reason is that we have got a lot of good stocks,” added the fund manager."


I look forward to the Feb update - hopefully not too much embarrassment vs the MSCI/peer group

https://bluewhale.co.uk/assets/files/Monthly%20Upd...

[simong800]

Yiu seems like a bit of a knob to be honest.

The constant talk of valuations while running a fund full of stocks priced at 40+ x earnings grates, whilst the very fact Blue Whale sits in IA global is odd in itself when it’s quite clearly a tech fund.

[bitchstewie]

Derek Chevalier said:

Blast from the past - saw this recently (always good to see "star fund manager")

https://www.marketwatch.com/story/heres-why-a-star...

Interesting quotes in your link.

“Last year the fund was up 8.6 per cent and the market [MSCI World index] was down by 3 per cent: the peer group, embarrassingly, was down [almost] 6 per cent,” said Blue Whale Capital founder Stephen Yiu."

"In a down market we outperformed and part of the reason is that we have got a lot of good stocks,” added the fund manager."


I look forward to the Feb update - hopefully not too much embarrassment vs the MSCI/peer group

https://bluewhale.co.uk/assets/files/Monthly%20Upd...

Not a fan of Yiu whenever I hear from him.

It's a fine line between being humble in your own successes and gloating at others who are less successful and I think he crosses it.

My guess is people might remember that kind of thing when he has a period of underperformance.