Fundsmith Smithson
Discussion
Looking for thoughts / opinions on the upcoming IPO. Anybody having a go?
I received the prospectus in the post (I guess all FEF investors did). Don't know much about IPOs but I gather there is some sort of application / placing process: is it worth applying (I'd be very much at the lower end of the subscription range), or does it just get ignored as noise amongst the institutional types? I like everything I've seen of Terry Smith, that is to say his 'Warren Buffett' approach to investing.
Not that it matters to my IPO question, but a 1-2k investment in Smithson would be approx 5-10% of my total invesments, consisting mainly of vanguard funds but also FEF (great!) and FEET (not that great!). 25-30 year horizon.
Interested in your views, thanks.
I received the prospectus in the post (I guess all FEF investors did). Don't know much about IPOs but I gather there is some sort of application / placing process: is it worth applying (I'd be very much at the lower end of the subscription range), or does it just get ignored as noise amongst the institutional types? I like everything I've seen of Terry Smith, that is to say his 'Warren Buffett' approach to investing.
Not that it matters to my IPO question, but a 1-2k investment in Smithson would be approx 5-10% of my total invesments, consisting mainly of vanguard funds but also FEF (great!) and FEET (not that great!). 25-30 year horizon.
Interested in your views, thanks.
DudleySquires said:
I like everything I've seen of Terry Smith, that is to say his 'Warren Buffett' approach to investing.
I see their styles as being quite different - Buffett is a value investor, and wouldn't expect to see them both do well at the same time.https://www.etf.com/sections/index-investor-corner...
Derek Chevalier said:
I see their styles as being quite different - Buffett is a value investor, and wouldn't expect to see them both do well at the same time.
This is a good discussion of the topic:https://smithson.co.uk/latest-news/newsstory/2018/...
On the Smithson website, but a repost of an investors chronicle article.
xeny said:
Derek Chevalier said:
I see their styles as being quite different - Buffett is a value investor, and wouldn't expect to see them both do well at the same time.
This is a good discussion of the topic:https://smithson.co.uk/latest-news/newsstory/2018/...
On the Smithson website, but a repost of an investors chronicle article.
FEET went to a premium post listing. That's relatively rare in the investment trust world, particularly for new issues (I think WPCT may have done so too but it is a long way off now!) so you may find waiting means the cost of entry is slightly higher. The usual reason to not buy ITs as IPOs is that they costs mean that the NAV is immediately <£1. Here there are no IPO costs so NAV should = subscription price on listing.
I'm interested in this as well; Fundsmith has done me tidily since I put money into it and this sounds like a slightly higher-risk but possibly higher-reward exercise. I have the money from the sale of a property and am wondering what to do with it and putting a good slice into Smithson is appealing as I suspect it will do well.
Anyone else's thoughts?
Anyone else's thoughts?
2Btoo said:
Anyone else's thoughts?
It's worth reading and understanding the FT article (especially the risk vs weekly return graph) here to appreciate the rationale:https://www.fundsmith.co.uk/news/article/2018/08/3...
There's a clearer version of the graph on page 4 of https://smithson.co.uk/docs/default-source/smithso...
If the reasoning is correct (always _if_) then with the appropriate asset balance it's possible to end up with higher returns and overall lower volatility for the portfolio as a whole.
xeny said:
2Btoo said:
Anyone else's thoughts?
It's worth reading and understanding the FT article (especially the risk vs weekly return graph) here to appreciate the rationale:https://www.fundsmith.co.uk/news/article/2018/08/3...
There's a clearer version of the graph on page 4 of https://smithson.co.uk/docs/default-source/smithso...
If the reasoning is correct (always _if_) then with the appropriate asset balance it's possible to end up with higher returns and overall lower volatility for the portfolio as a whole.
1. Volatility isn't the only way to measure risk - you need to look at drawdown as well i.e. how much does the asset fall during volatile times
2. Factors often go missing for long periods of time - see the value factor over the last decade. How much tracking error are you comfortable with?
3. Exposure to small cap often costs more
4. There is ongoing debate over the small cap (risk adjusted) premium and whether it existed (different ways of measuring).
5. Will factors continue to outperform in the era of "smart beta" funds?
xeny, yes, it's that graph that caught my attention. If (if!) it's true then it's surely to be taken notice of.
DC, thanks. You know a LOT more about this subject than do I; I'm not financially literate and simply don't understand many of the terms you used in your post. Put simply, I liked the idea of Fundsmith as the logic made sense and I liked Smith himself and thought he talked a good talk. He's done very well for me indeed over the last 8 years and I'm therefore willing to put more of my money on stuff that he does. The downside is that I also put a lot into FEET using the same logic and that hasn't done well at all.
My choice therefore is whether to put the lump sum from the sale of a property into Fundsmith or whether to put some into Smithson. I'm very likely to put some into both, the question is what split to make.
Currently I am feeling lucky, so it's quite possible that a large proportion will go into Smithson and I'll keep my fingers crossed. I am fully aware that this is not a logical approach to investing six figure sums but the alternative is a reasonable interest bank account (!) or spend a LOT of time and/or money on financial advisers who may or may not give me good advice.
If this post has just identified me as 'Investing Mug Of The Year' then it's a title I'll be happy to own!
DC, thanks. You know a LOT more about this subject than do I; I'm not financially literate and simply don't understand many of the terms you used in your post. Put simply, I liked the idea of Fundsmith as the logic made sense and I liked Smith himself and thought he talked a good talk. He's done very well for me indeed over the last 8 years and I'm therefore willing to put more of my money on stuff that he does. The downside is that I also put a lot into FEET using the same logic and that hasn't done well at all.
My choice therefore is whether to put the lump sum from the sale of a property into Fundsmith or whether to put some into Smithson. I'm very likely to put some into both, the question is what split to make.
Currently I am feeling lucky, so it's quite possible that a large proportion will go into Smithson and I'll keep my fingers crossed. I am fully aware that this is not a logical approach to investing six figure sums but the alternative is a reasonable interest bank account (!) or spend a LOT of time and/or money on financial advisers who may or may not give me good advice.
If this post has just identified me as 'Investing Mug Of The Year' then it's a title I'll be happy to own!
2Btoo said:
xeny, yes, it's that graph that caught my attention. If (if!) it's true then it's surely to be taken notice of.
DC, thanks. You know a LOT more about this subject than do I; I'm not financially literate and simply don't understand many of the terms you used in your post. Put simply, I liked the idea of Fundsmith as the logic made sense and I liked Smith himself and thought he talked a good talk. He's done very well for me indeed over the last 8 years and I'm therefore willing to put more of my money on stuff that he does. The downside is that I also put a lot into FEET using the same logic and that hasn't done well at all.
My choice therefore is whether to put the lump sum from the sale of a property into Fundsmith or whether to put some into Smithson. I'm very likely to put some into both, the question is what split to make.
Currently I am feeling lucky, so it's quite possible that a large proportion will go into Smithson and I'll keep my fingers crossed. I am fully aware that this is not a logical approach to investing six figure sums but the alternative is a reasonable interest bank account (!) or spend a LOT of time and/or money on financial advisers who may or may not give me good advice.
If this post has just identified me as 'Investing Mug Of The Year' then it's a title I'll be happy to own!
If you are looking at investing a six figure sum (which I assume is a large part of your net wealth), it might be worth doing some reading around the subject to give you a better chance of making the correct decision.DC, thanks. You know a LOT more about this subject than do I; I'm not financially literate and simply don't understand many of the terms you used in your post. Put simply, I liked the idea of Fundsmith as the logic made sense and I liked Smith himself and thought he talked a good talk. He's done very well for me indeed over the last 8 years and I'm therefore willing to put more of my money on stuff that he does. The downside is that I also put a lot into FEET using the same logic and that hasn't done well at all.
My choice therefore is whether to put the lump sum from the sale of a property into Fundsmith or whether to put some into Smithson. I'm very likely to put some into both, the question is what split to make.
Currently I am feeling lucky, so it's quite possible that a large proportion will go into Smithson and I'll keep my fingers crossed. I am fully aware that this is not a logical approach to investing six figure sums but the alternative is a reasonable interest bank account (!) or spend a LOT of time and/or money on financial advisers who may or may not give me good advice.
If this post has just identified me as 'Investing Mug Of The Year' then it's a title I'll be happy to own!
Pete Matthew has just released a book and has a great website (he's one of the leading figures in the profession)
https://www.amazon.co.uk/Meaningful-Money-Handbook...
https://meaningfulmoney.tv/build-wealth/
Best of luck!
2Btoo said:
Currently I am feeling lucky, so it's quite possible that a large proportion will go into Smithson and I'll keep my fingers crossed. I am fully aware that this is not a logical approach to investing six figure sums but the alternative is a reasonable interest bank account (!) or spend a LOT of time and/or money on financial advisers who may or may not give me good advice.
You know how much you already have invested already, you know how much you're willing to invest, and you could buy fundsmith and smithson in the right proportions to put yourself overall somewhere on the sweet part of the curve where either returns are higher than bare fundsmith, or risk is lower than bare fundsmith, depending on your priorities.Derek Chevalier said:
If you are looking at investing a six figure sum (which I assume is a large part of your net wealth), it might be worth doing some reading around the subject to give you a better chance of making the correct decision.
Pete Matthew has just released a book and has a great website (he's one of the leading figures in the profession)
https://www.amazon.co.uk/Meaningful-Money-Handbook...
https://meaningfulmoney.tv/build-wealth/
Best of luck!
Balls, print copy is out of stock.Pete Matthew has just released a book and has a great website (he's one of the leading figures in the profession)
https://www.amazon.co.uk/Meaningful-Money-Handbook...
https://meaningfulmoney.tv/build-wealth/
Best of luck!
Looks a great read that - Having read 'How to own the world' by Andrew Craig I've been on the lookout for similar book, in particular something easy to read.
I've finished reading 'the long and short of it' by John Kay, a useful book but painful to read.
Derek Chevalier said:
Pete Matthew has just released a book and has a great website (he's one of the leading figures in the profession)
https://www.amazon.co.uk/Meaningful-Money-Handbook...
https://meaningfulmoney.tv/build-wealth/
Best of luck!
Thanks DC - that is helpful. I kinda hope it doesn't come down to luck though .... https://www.amazon.co.uk/Meaningful-Money-Handbook...
https://meaningfulmoney.tv/build-wealth/
Best of luck!
xeny said:
You know how much you already have invested already, you know how much you're willing to invest, and you could buy fundsmith and smithson in the right proportions to put yourself overall somewhere on the sweet part of the curve where either returns are higher than bare fundsmith, or risk is lower than bare fundsmith, depending on your priorities.
Xeny, I think you probably have hit the nail on the head with this - it's spot on. I guess I am posting here to see if there is anyone with more financial acumen than me who can say "Oh don't invest in that - it's a terrible idea", or possibly "Yeah, it's a good idea and well worth sticking a couple of bob into". Interestingly there isn't much chatter about Smithson on here (I think this and only one other thread have mentioned it) so I am wondering why more people don't know about it. 2Btoo said:
I guess I am posting here to see if there is anyone with more financial acumen than me who can say "Oh don't invest in that - it's a terrible idea", or possibly "Yeah, it's a good idea and well worth sticking a couple of bob into". Interestingly there isn't much chatter about Smithson on here (I think this and only one other thread have mentioned it) so I am wondering why more people don't know about it.
Exactly why I started the thread. I'm erring on the side of applying on the basis of FEF performance and, as I said in my OP, the cut of Terry Smith's jib (to misuse an expression) - what he says makes a lot of sense to me. Additionally, the bulk of my investments are in two Vanguard index funds - UK and ex-UK (based on the advice of a Danish index-tracker evangelist chap who's name I can't remember) - so in a sense the Fundsmith investments are a bit of a curiosity to me.Gassing Station | Finance | Top of Page | What's New | My Stuff