Discussion
Why do you think that ?
Fundsmith has investments in c25 companies that considerable research has been done and they are sound long term companies with considerable long term potential with dividends, possible mergers, acquisitions, etc.
Terry Smith took a leaf out of Warren Buffet's book with his investment strategy and it does seem to have been successful.
One of the Fundsmith holdings is Dr Pepper Snapple and has just been sold to JAD Holdings (Krispy Kreme Donuts) in an $18.7 billion deal and share holders will receive $100+ per share which will give Fundsmith a good boost.
I switched a large percentage of my pension into Fundsmith in 2015 (wish I had done so earlier) and I have seen growth of 50+% since then. There could be correction but it will likely only be a short term correction and in the medium to long term Fundsmith is likely to continue to perform well - look at the companies it has invested in, e.g. Paypal, Amadeus, Microsoft, etc...
Fundsmith has investments in c25 companies that considerable research has been done and they are sound long term companies with considerable long term potential with dividends, possible mergers, acquisitions, etc.
Terry Smith took a leaf out of Warren Buffet's book with his investment strategy and it does seem to have been successful.
One of the Fundsmith holdings is Dr Pepper Snapple and has just been sold to JAD Holdings (Krispy Kreme Donuts) in an $18.7 billion deal and share holders will receive $100+ per share which will give Fundsmith a good boost.
I switched a large percentage of my pension into Fundsmith in 2015 (wish I had done so earlier) and I have seen growth of 50+% since then. There could be correction but it will likely only be a short term correction and in the medium to long term Fundsmith is likely to continue to perform well - look at the companies it has invested in, e.g. Paypal, Amadeus, Microsoft, etc...
Somewhere in one of his AGM videos he says he considers the fund is likely to offer its best relative performance in bad markets. Of course, if the market is bad enough everything is going down, it is just a matter of degree.
As an insanely rough metric, look at finance.google.co.uk, and find say LS100 and Fundsmith - look at the relative "Worst 3-month return" figures.
As an insanely rough metric, look at finance.google.co.uk, and find say LS100 and Fundsmith - look at the relative "Worst 3-month return" figures.
Edited by xeny on Saturday 3rd February 10:26
Stuart1961 said:
Why do you think that ?
Fundsmith has investments in c25 companies that considerable research has been done and they are sound long term companies with considerable long term potential with dividends, possible mergers, acquisitions, etc.
Terry Smith took a leaf out of Warren Buffet's book with his investment strategy and it does seem to have been successful.
One of the Fundsmith holdings is Dr Pepper Snapple and has just been sold to JAD Holdings (Krispy Kreme Donuts) in an $18.7 billion deal and share holders will receive $100+ per share which will give Fundsmith a good boost.
I switched a large percentage of my pension into Fundsmith in 2015 (wish I had done so earlier) and I have seen growth of 50+% since then. There could be correction but it will likely only be a short term correction and in the medium to long term Fundsmith is likely to continue to perform well - look at the companies it has invested in, e.g. Paypal, Amadeus, Microsoft, etc...
Only 25 companies? Regardless, while the fund will likely perform well in the long term, that doesn’t mean it will avoid losses in the event of a significant downturn, so it all depends on your investment horizon.Fundsmith has investments in c25 companies that considerable research has been done and they are sound long term companies with considerable long term potential with dividends, possible mergers, acquisitions, etc.
Terry Smith took a leaf out of Warren Buffet's book with his investment strategy and it does seem to have been successful.
One of the Fundsmith holdings is Dr Pepper Snapple and has just been sold to JAD Holdings (Krispy Kreme Donuts) in an $18.7 billion deal and share holders will receive $100+ per share which will give Fundsmith a good boost.
I switched a large percentage of my pension into Fundsmith in 2015 (wish I had done so earlier) and I have seen growth of 50+% since then. There could be correction but it will likely only be a short term correction and in the medium to long term Fundsmith is likely to continue to perform well - look at the companies it has invested in, e.g. Paypal, Amadeus, Microsoft, etc...
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hstewie said:
hstewie said: Anyone have any thoughts on how well Fundsmith is likely to hold up if there is some kind of correction due shortly?
If something looks too good to be true it usually means it is but when you watch Terry Smith on their AGM video he seems pretty straightforward.
No one knows, but surely if he is only a relatively small part of a diversified portfolio there shouldn't be a big deal if he has a rocky patch?If something looks too good to be true it usually means it is but when you watch Terry Smith on their AGM video he seems pretty straightforward.
I ploughed through one of Elton and Gruber's original papers (http://pages.stern.nyu.edu/~eelton/papers/77-oct.pdf) on the diversity vs risk issue when I first looked at Fundsmith.
They state that 28 stocks (handy that) gave you risk 20% higher than the minimum. Particularly they emphasize that adding more stocks results in a diminishing returns reduction of risk. - page 426 of the linked pdf.
They state that 28 stocks (handy that) gave you risk 20% higher than the minimum. Particularly they emphasize that adding more stocks results in a diminishing returns reduction of risk. - page 426 of the linked pdf.
BanzaiMan said:
No one knows, but surely if he is only a relatively small part of a diversified portfolio there shouldn't be a big deal if he has a rocky patch?
That's certainly true - however Fundsmith's performance leaves a certain temptation to:"Give your money to Terry Smith.
Sell the flat. Max out both isa’s, yearly. Keep the Aston"
a quote that makes me smile from https://www.pistonheads.com/gassing/topic.asp?h=0&... - Harry Flashman's thread on "How do I become investment literate?"
At which point it clearly is a big (and probably not sensible, although I note with interest it is essentially Terry's aproach) deal.
As an aside, is there any way to link to individual posts in threads?
bhstewie said:
hstewie said: Just to be clear I'm not going to give all my money to Terry (or anyone 
)
I am looking at what proportion of the equities pot to put in Fundsmith with the rest likely just going in a global tracker.
How greedy are you? How fearful are you?)I am looking at what proportion of the equities pot to put in Fundsmith with the rest likely just going in a global tracker.
How much less risky is the global tracker compared to Fundsmith is essentially the question isn't it.
Put it ALL in Fundsmith. I have.
No guts, no glory.
Diversification - the whole idea of it - is balls. Diversify into what? Investments with poorer returns usually!
Terry is the man! He himself says there are only 30-40 decent companies out there worth investing in. Diversifying into some 'world tracker' is BS.
No guts, no glory.
Diversification - the whole idea of it - is balls. Diversify into what? Investments with poorer returns usually!
Terry is the man! He himself says there are only 30-40 decent companies out there worth investing in. Diversifying into some 'world tracker' is BS.
xeny said:
I ploughed through one of Elton and Gruber's original papers (http://pages.stern.nyu.edu/~eelton/papers/77-oct.pdf) on the diversity vs risk issue when I first looked at Fundsmith.
They state that 28 stocks (handy that) gave you risk 20% higher than the minimum. Particularly they emphasize that adding more stocks results in a diminishing returns reduction of risk. - page 426 of the linked pdf.
I'll have a read, but surely this doesn't take into account...They state that 28 stocks (handy that) gave you risk 20% higher than the minimum. Particularly they emphasize that adding more stocks results in a diminishing returns reduction of risk. - page 426 of the linked pdf.
the fund manager's ability/desire to stick to his investment mandate
whether his investing style continues to outperform (see Woodford currently)
whether US as a whole continues to do well (Fundsmith is 62% US)
GBPUSD fluctuations (which has accounted for an element of outperformance historically I would expect)
xeny said:
How greedy are you? How fearful are you?
How much less risky is the global tracker compared to Fundsmith is essentially the question isn't it.
I'd say I'm sensible rather than greedy in that everything about Fundsmith appears sensible i.e. stick to quality companies.How much less risky is the global tracker compared to Fundsmith is essentially the question isn't it.
As for fearful, there's a large chunk going into much a more defensive and diverse allocation to balance out a bad time with equities.
Interestingly if I look at some of the most defensive funds out there there's a degree of crossover with Fundsmith for their equities allocations.
That's the paradox, Fundsmith seem to offer great returns but doesn't actually appear that risky based off what I think I know.
sidicks said:
Stuart1961 said:
Why do you think that ?
Fundsmith has investments in c25 companies that considerable research has been done and they are sound long term companies with considerable long term potential with dividends, possible mergers, acquisitions, etc.
Terry Smith took a leaf out of Warren Buffet's book with his investment strategy and it does seem to have been successful.
One of the Fundsmith holdings is Dr Pepper Snapple and has just been sold to JAD Holdings (Krispy Kreme Donuts) in an $18.7 billion deal and share holders will receive $100+ per share which will give Fundsmith a good boost.
I switched a large percentage of my pension into Fundsmith in 2015 (wish I had done so earlier) and I have seen growth of 50+% since then. There could be correction but it will likely only be a short term correction and in the medium to long term Fundsmith is likely to continue to perform well - look at the companies it has invested in, e.g. Paypal, Amadeus, Microsoft, etc...
Only 25 companies? Regardless, while the fund will likely perform well in the long term, that doesn’t mean it will avoid losses in the event of a significant downturn, so it all depends on your investment horizon.Fundsmith has investments in c25 companies that considerable research has been done and they are sound long term companies with considerable long term potential with dividends, possible mergers, acquisitions, etc.
Terry Smith took a leaf out of Warren Buffet's book with his investment strategy and it does seem to have been successful.
One of the Fundsmith holdings is Dr Pepper Snapple and has just been sold to JAD Holdings (Krispy Kreme Donuts) in an $18.7 billion deal and share holders will receive $100+ per share which will give Fundsmith a good boost.
I switched a large percentage of my pension into Fundsmith in 2015 (wish I had done so earlier) and I have seen growth of 50+% since then. There could be correction but it will likely only be a short term correction and in the medium to long term Fundsmith is likely to continue to perform well - look at the companies it has invested in, e.g. Paypal, Amadeus, Microsoft, etc...
BanzaiMan said:
I'll have a read, but surely this doesn't take into account...
the fund manager's ability/desire to stick to his investment mandate
whether his investing style continues to outperform (see Woodford currently)
whether US as a whole continues to do well (Fundsmith is 62% US)
GBPUSD fluctuations (which has accounted for an element of outperformance historically I would expect)
Agreed - the paper is essentially blind in its asset selection criteria - I can't quite face buying/reading https://www.amazon.co.uk/Modern-Portfolio-Theory-I... which I hope discusses that kind of thing. That obviously raises the risk of asset behaviour correlation when you're picking stocks with similar characteristics.the fund manager's ability/desire to stick to his investment mandate
whether his investing style continues to outperform (see Woodford currently)
whether US as a whole continues to do well (Fundsmith is 62% US)
GBPUSD fluctuations (which has accounted for an element of outperformance historically I would expect)
Considering your other points with regard to Fundsmith
Agreed, but I suspect he's in a good position to remain consistent - he seems to have been using the approach for some ~ 13 years at this point.
Most definitely, and that's my largest concern (I think Woodford at this point is making panicky choices trying to get a fast return to retain AUM)
Agreed - although they argue while the companies are domiciled in the US, their income is more diverse
They benchmark against the MSCI world in £, so I think this is a non-issue.
My feeling's are similar to b*stewie's - I find it a bit of a paradox, the returns are very acceptable for something that doesn't leave you invested in Elbonia anxiously awaiting the next coup or civil war.
BoRED S2upid said:
It’s performed pretty well in the short term never mind long term as Stuart points out 50% since 2015 is pretty decent.
Of course it has, so have the majority of equity markets over the period!The point is that, in the event of a downturn, this fund will suffer like any other equity investment. It's only been running since 2010, so hasn't had to cope with any serious bear markets.
It's clearly a good fund with a decent track record, so I'm certainly not dismissing the fund.
Edited by sidicks on Saturday 3rd February 13:51
CastroSays said:
Put it ALL in Fundsmith. I have.
No guts, no glory.
Over the long term, that possibly won't be a bad strategy, but it's important not to be oblivious to the risks implicit in that strategy.No guts, no glory.
CastroSays said:
Diversification - the whole idea of it - is balls. Diversify into what? Investments with poorer returns usually!
That's total nonsense, as you probably know. You're either extremely poorly informed or you're just trying to be provocative?CastroSays said:
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Terry is the man! He himself says there are only 30-40 decent companies out there worth investing in. Diversifying into some 'world tracker' is BS.
Except it isn't. According to the website, as well as company risk, the fund takes currency risk, which has worked well in the past, but may be a negative for performance if the pound strengthens in the future.Terry is the man! He himself says there are only 30-40 decent companies out there worth investing in. Diversifying into some 'world tracker' is BS.
What is the performance history of the fund, during a significant bear market?
Edited by sidicks on Saturday 3rd February 14:09
Up almost 24% in last year to date (£ has been rising against $ for that period and up 16% or so since Brexit vote)
Up 77% over 3 years and 125% since Nov 2013 when first invested. Hasn't been around in bear market but up around 260% since launch near end of 2010.
Has a lot of US stocks - $ will weaken if Oil price continues to rise and US stocks seem highly priced compared to some other markets.
Some papers said 16 year rise in Consumer staple stocks a risk (circa 40% of Fundsmith then) in April 2016 (has risen 48% since then). Earnings of those should hold up more than most & TS doesn't go for the FANG plus Tencent/Alibaba type stock which has shown more spiking up in prices over last 2 years. Currently seems to be invested in some of the more defensive sectors.
Have reduced my investment in last 15 months as needed funds for other stuff . Would be affected by a market dip yes but he's done a pretty good job to date and invests in good companies. More concerned about smaller cos funds as they are more volatile.
Need to be in the market as can easily miss out on big day gains which often follow periods of losses and gains before dips.
Up 77% over 3 years and 125% since Nov 2013 when first invested. Hasn't been around in bear market but up around 260% since launch near end of 2010.
Has a lot of US stocks - $ will weaken if Oil price continues to rise and US stocks seem highly priced compared to some other markets.
Some papers said 16 year rise in Consumer staple stocks a risk (circa 40% of Fundsmith then) in April 2016 (has risen 48% since then). Earnings of those should hold up more than most & TS doesn't go for the FANG plus Tencent/Alibaba type stock which has shown more spiking up in prices over last 2 years. Currently seems to be invested in some of the more defensive sectors.
Have reduced my investment in last 15 months as needed funds for other stuff
. Would be affected by a market dip yes but he's done a pretty good job to date and invests in good companies. More concerned about smaller cos funds as they are more volatile.Need to be in the market as can easily miss out on big day gains which often follow periods of losses and gains before dips.
Edited by RL17 on Saturday 3rd February 14:55
RL17 said:
Up almost 24% in last year to date (£ has been rising against $ for that period and up 16% or so since Brexit vote)
Up 77% over 3 years and 125% since Nov 2013 when first invested. Hasn't been around in bear market but up around 260% since launch near end of 2010.
Has a lot of US stocks - $ will weaken if Oil price continues to rise and US stocks seem highly priced compared to some other markets.
Some papers said 16 year rise in Consumer staple stocks a risk (circa 40% of Fundsmith then) in April 2016 (has risen 48% since then). Earnings of those should hold up more than most & TS doesn't go for the FANG plus Tencent/Alibaba type stock which has shown more spiking up in prices over last 2 years. Currently seems to be invested in some of the more defensive sectors.
Have reduced my investment in last 15 months as needed funds for other stuff . Would be affected by a market dip yes but he's done a pretty good job to date and invests in good companies. More concerned about smaller cos funds as they are more volatile.
Need to be in the market as can easily miss out on big day gains which often follow periods of losses and gains before dips.
I can't disagree with anything yo've said.Up 77% over 3 years and 125% since Nov 2013 when first invested. Hasn't been around in bear market but up around 260% since launch near end of 2010.
Has a lot of US stocks - $ will weaken if Oil price continues to rise and US stocks seem highly priced compared to some other markets.
Some papers said 16 year rise in Consumer staple stocks a risk (circa 40% of Fundsmith then) in April 2016 (has risen 48% since then). Earnings of those should hold up more than most & TS doesn't go for the FANG plus Tencent/Alibaba type stock which has shown more spiking up in prices over last 2 years. Currently seems to be invested in some of the more defensive sectors.
Have reduced my investment in last 15 months as needed funds for other stuff
. Would be affected by a market dip yes but he's done a pretty good job to date and invests in good companies. More concerned about smaller cos funds as they are more volatile.Need to be in the market as can easily miss out on big day gains which often follow periods of losses and gains before dips.
sidicks said:
What is the performance history of the fund, during a significant bear market?
The nearest thing to that I know of is the Tulett Prebon pension fund performance, and I've only seen that on one of the original presentation videos 2:40 into https://www.youtube.com/watch?v=CqH4dQY_Hxw - which quotes 13.53% after fees December 2003 to December 2010, so at least averaged across a bear market it's tolerable.Edited by sidicks on Saturday 3rd February 14:09
Hunting around, the TP annual reports are here
https://www.tullettprebon.com/investor/investor-re...
and I think it may be possible to piece together some idea of annual performance from them, although I acknowledge that isn't perfect.
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