Discussion
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hstewie said:
hstewie said: So at that point how do you pick a fund manager?
I use a pretty simple and reliable way of selecting a fund manager. It works on the principal that the vast majority are st at doing what they claim they exist to do, beat the market. Those that do beat the market in a year have normally just done so by luck. If they have a long enough winning streak they can move to a firm with a better name, some can even become famous like reality TV stars for a brief moment in time before their lucky streak runs out, they stop being a capital lure and their employers wants to reload with a fresh Z lister. It's an industry where one's bonus isn't defined by being the best in one's field but just not being the worst. So if one arrives at the opinion that the typical fund manager adds cost not value and has no discernible ability to predict the market but whose actual role is as a salesperson to go out and sell the fund after years of knowing these people, going to school, uni, holidays with lifelong friends in this space then the only selection criteria one ends up at is that if a fund has a fund manager who claims to be Mystic Meg then leave well alone.
I have an extreme view but it is based on having known a fair number of 'star managers' and knowing a fair number of people who manage funds aimed at the retail market. And seeing no sound reason to pay them any of my money to just add a layer of marketing bulls
t. DonkeyApple said:
bhstewie said:
hstewie said: So at that point how do you pick a fund manager?
I use a pretty simple and reliable way of selecting a fund manager. It works on the principal that the vast majority are st at doing what they claim they exist to do, beat the market. Those that do beat the market in a year have normally just done so by luck. If they have a long enough winning streak they can move to a firm with a better name, some can even become famous like reality TV stars for a brief moment in time before their lucky streak runs out, they stop being a capital lure and their employers wants to reload with a fresh Z lister. It's an industry where one's bonus isn't defined by being the best in one's field but just not being the worst. So if one arrives at the opinion that the typical fund manager adds cost not value and has no discernible ability to predict the market but whose actual role is as a salesperson to go out and sell the fund after years of knowing these people, going to school, uni, holidays with lifelong friends in this space then the only selection criteria one ends up at is that if a fund has a fund manager who claims to be Mystic Meg then leave well alone.
I have an extreme view but it is based on having known a fair number of 'star managers' and knowing a fair number of people who manage funds aimed at the retail market. And seeing no sound reason to pay them any of my money to just add a layer of marketing bulls
t. 
Hi. Long time lurker.
There are also tracker ETFs for quality indices (like XDEQ Xtrackers MSCI World Quality) for anyone who thinks quality factor investing is a good idea but Fundsmith isn't the best way to achieve it. Fundsmith seems to have outperformed it in the past, but the tracker outperformed it over the last year.
There are also tracker ETFs for quality indices (like XDEQ Xtrackers MSCI World Quality) for anyone who thinks quality factor investing is a good idea but Fundsmith isn't the best way to achieve it. Fundsmith seems to have outperformed it in the past, but the tracker outperformed it over the last year.
Sheepshanks said:
Looks like it's just topped its Dec 21 high.
Its stated aim is long term (5yrs+) growth. It's unfortunate that it come our pretty flat over the last 2yrs.
Which could have been achieved with a tracker. I’ve been investing in both this and a tracker for about 3 years now. Same amounts in each and they’re very very similar. But he’s been accused of index hugging for a while now, results beginning to back that somewhat. Its stated aim is long term (5yrs+) growth. It's unfortunate that it come our pretty flat over the last 2yrs.
okgo said:
Which could have been achieved with a tracker. I’ve been investing in both this and a tracker for about 3 years now. Same amounts in each and they’re very very similar. But he’s been accused of index hugging for a while now, results beginning to back that somewhat.
I suppose the more companies in the fund - think there's 40 odd? - then the more likely that is to happen. I know there's different weights and they're from different indexes, but it's got to be pretty hard to consistently significantly outperform without taking a lot of risk.
Sheepshanks said:
I suppose the more companies in the fund - think there's 40 odd? - then the more likely that is to happen. I know there's different weights and they're from different indexes, but it's got to be pretty hard to consistently significantly outperform without taking a lot of risk.
Just a little reminder that Smith doesn't claim to be after the best return but the best return adjusted for risk.Not sure how you judge risk but that's what the owners manual and Smith himself say at every opportunity.
I've finally pulled almost all of my money in Fundsmith now.
Did well over the years prior to COVID but now better sitting in an account for the offset mortgage effectively paying me 6.25% and covering half the monthly payments.
So the rest of you had better pile in as I almost always make the wrong decision investment wise
Did well over the years prior to COVID but now better sitting in an account for the offset mortgage effectively paying me 6.25% and covering half the monthly payments.
So the rest of you had better pile in as I almost always make the wrong decision investment wise
Stedman said:
Interesting point at 55 mins - “if you had owned the ‘magnificent seven’ over the last two years, you would have underperformed the index”bhstewie said:
hstewie said: How is Smith selling that then?
I imagine he’s defining risk differently. He’s probably seeing risk as weak balance sheets, net debt etc so using those metrics his fund is lower risk of course. But as an investor rather than being Terry Smith, I tend to see volatility, drawdowns and valuation as risk metrics I’m interested in.
I also think he underplays the risk of making a massive factor bet, but you’d expect that given his fund IS a massive factor bet (I.e on quality factor).
If quality and high PE ratios come back into fashion Fundsmith will no doubt excel again, but I just don’t have the foresight to know if and when this might happen.
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