Fundsmith

[bitchstewie]

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.

[bitchstewie]

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.

[bitchstewie]

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.

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.

[bitchstewie]

Phooey said:

Sorry to hijack the thread..

Most sensible way to invest in Fundsmith - directly or via your IFA? My ISA is on a Standard Life Wrap platform so if I asked my IFA to put some money in FS my thinking is I would be paying a LOT of fees (IFA + SL Wrap + FS). I can only invest in one ISA a year so I would need to make a decision - go direct to FS and *only* invest in FS (Full £20k for 2018/19) or ask my IFA to add FS to my current portfolio. I currently max-out my ISA allowance by paying monthly Direct-Debit. I'm not sure if it would get messy or disadvantageous having numerous ISAs. What do you guys think?

Also, what are the total costs by going direct to FS? There appears to be two different funds and at quick glance can't seem to work out the costs / fees...

Unless I've misunderstood, you can't do what you're talking about as you can only pay into one ISA each financial year.

So you couldn't open an ISA with Fundsmith and put money in that and pay into your existing ISA by DD at the same time.

[bitchstewie]

Regards diversifying a little I was also looking at LT Global Equity.

Should also add this is about the initial chunk to go into an ISA that will be getting maxed out each year and is there for the long term so if I need to change course I can do so.

I should just say a big thank you to everyone who's replied on any of my numerous threads - appreciate the questions may be basic stuff to many but I'd like to try to understand v simply doing what a book says and I'm certainly not looking to get rich quick, hence my "paradox" point about Fundsmith (and LT Global to some degree).

[bitchstewie]

xeny said:

2:30 into https://www.youtube.com/watch?v=Jo5e2TlGuoQ - it's a presentation to the IoD.

Every bloody video I watch has me more impressed at how straight talking the bloke seems.

Not sure the Aston will be arriving any time soon but he does deliver a bloody good talk.

[bitchstewie]

Any thoughts on Lindsell Train Global Equity?

Seems a similar approach to Fundsmith (there's some overlap) but the clue's in the name, seems to have a more global mix whilst Fundsmith is basically 65/35 US/UK split.

[bitchstewie]

ringram said:

Err Linsell Tran was/is trading at a premium. Why would you pay over the price of the assets when FS trades at the underlying asset price!?

I thought that was the Investment Trust not the funds?

[bitchstewie]

Well I've just started the ball rolling with some money into Lindsell Train Global Equity.

I've been reading up on "pound cost averaging" so will likely add a little each week to take me up to this years ISA limit then do the same next tax year (not all in Lindsell Train).

[bitchstewie]

Anyone else find it slightly nuts that the likes of Sainsbury's and Xerox qualify as "Smaller Companies"?

[bitchstewie]

I thought it was a bit of a rotation to value combined with the impact of the pound going from around $1.20 to $1.32.

It's about level with a world tracker for the past 12 months so I'd be cautious of saying it's done badly.

Nothing goes up forever.

[bitchstewie]

Scottish Mortgage Trust most definitely does not always go up.

I frequently see people on forums freaking out because they've put money into it and it's shed 10% very quickly even if it can also put it back on very quickly.

[bitchstewie]

emicen said:

bhstewie said:

Scottish Mortgage Trust most definitely does not always go up.

I frequently see people on forums freaking out because they've put money into it and it's shed 10% very quickly even if it can also put it back on very quickly.

I’ve heard that fund mentioned but never really looked at it before. Last couple of years have been quite a roller coaster there!

I think it's more an example of be aware what you're investing in.

It's a fund with some high conviction positions in growth/disruptive companies so there will be ups and downs.

The ups are great but a lot of people see the returns and pile in and are surprised when there's a down

[bitchstewie]

Terry Smith: No chance of me making Woodford’s style drift or illiquidity mistakes

Annual letter from Terry

[bitchstewie]

drmotorsport said:

Interesting to see how Fundsmith Equity has performed in a big market test over the last few weeks. I'm a fan of settling for the market average over long periods rather then trying to outperform it, and so passive trackers are the majority of my investments. However the recent massive market falls I think have demonstrated how an active fund can "add value". A quick check on HL charts seems to indicate that over the last 3 months Fundsmith has gone from a peak of around 6% rise to a low of -16%, compared to S&P500 peaking similarly but falling somewhat further to around -21%.

A 5% difference is surely a handy springboard especially if you're regularly topping up?

Pulling the thread up now we're at the end of the year and comparing Fundsmith to the S&P suggests it has indeed had a better year overall.

What do people think of Fundsmith for the next ten years?

[bitchstewie]

mike74 said:

I'm completely new to investing but I am considering putting a lump sum in FS, sorry for the rather simpleton question but is your money effectively ''tied up'' for a set period of time or could I start to draw down on it at some point in the future just like I can with cash in a savings account?

For example if I was to invest £100k now but in perhaps 5 or 10 years time I'd want to start withdrawing £5k a year?

I know this may be patronising you but simply as you mention you're "completely new".

Keep in mind Fundsmith is a fairly concentrated equity fund.

It's done well to date but it's not inconceivable that it could lose 40% of its value and might not recover either quickly or at all.

That's the nature of equities it's not unique to Fundsmith but whilst you can treat it a bit like a savings account in terms of access the behaviour isn't.

Sorry if you know that but the thought of checking your account balance and seeing £60K instead of £100K can focus the mind on your real appetite for volatility

[bitchstewie]

mike74 said:

Sorry (simpleton question) what do you actually mean by ''if I propose to invest in FS directly'' what would be the other ''indirect'' methods of investing in FS?

You can invest directly via Fundsmith themselves or you can use a "platform" such as Hargreaves Lansdown (they're one of the more expensive ones).

If you use a platform you'll typically pay them an additional fee too but you have access to pretty much every fund or stock or investment trust available.

[bitchstewie]

mike74 said:

Ah right, so if I did invest via a platform it would be easier if I did want to pull some or all out of FS and redirect funds elsewhere.

Although it would be unlikely for me to be doing that if FS was performing adequately, I doubt I'm ever going to develop the analytical knowledge or even have the time or inclination to be chopping and changing between various funds

Basically yes but platforms are a topic in their own right.

Let's use Hargreaves Lansdown as an example just because they're one of the biggest.

If you go to Fundsmith directly the fee for the T class shares they offer is 1.05%.

If you go to HL and buy Fundsmith you'll usually buy the I class shares which have a fee of 0.95% but HL charge you 0.45% to hold funds on their platform.

So if you invest £100K with HL you'll literally see HL taking about £37/month in fees (more as your £100K hopefully grows) from your account.

You pay more overall but you have access to everything HL offer.

If you're absolutely sure you don't need it then using Fundsmith directly is a sensible choice.

If you haven't already done so go on YouTube and watch the AGM's as at the end of the day you're thinking of giving someone a hundred grand to look after.

You might want to look at Vanguard as well or have a look at the IM threads.

[bitchstewie]

mike74 said:

Thanks yes Vanguard is the other one I've been meaning to have a look at.

They're a good low cost option if you want to dial down the risk a bit with some of the money.

Similar to Fundsmith in that you can invest direct or via a platform.

I don't know much about tax wrappers other than ISA's but keep in mind you "only" have a £20K ISA allowance so whatever you do you can't invest the lot in an ISA in one go if it isn't already in one.

[bitchstewie]

I expect a lot of people who put money in Baillie Gifford funds or trusts a month or two back thought the same

You're right of course whatever happens tomorrow it's on sale today for 4% less than last week.