Tempted to move some VLS into active

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  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
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    bostonerimus wrote: »
    How do you know it's a bad time. Next year it could be up another 50% so not investing now would be foolish.

    Up 172% in five years. 50% rise in one year would be an extreme expectation. Despite the portfolio having a concentrated focus. Microsoft, Pepsico PayPal, Philip Morris and InterContinental Hotels don't strike me as companies in a position to deliver stellar short term growth. Leaves a few other stocks to be incredibly underpriced in what many already believe to be an overvalued market (generally).
  • bostonerimus
    bostonerimus Posts: 5,617 Forumite
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    Thrugelmir wrote: »
    Up 172% in five years. 50% rise in one year would be an extreme expectation. Despite the portfolio having a concentrated focus. Microsoft, Pepsico PayPal, Philip Morris and InterContinental Hotels don't strike me as companies in a position to deliver stellar short term growth. Leaves a few other stocks to be incredibly underpriced in what many already believe to be an overvalued market (generally).

    You could have said the same thing a year ago.

    So time to take some profits and rebalance? But I'm sure Fundsmith will be on the top of many year end lists so why not double down on success? I'm being devil's advocate here. If we are talking about a 20, 30 or longer time horizon what criteria are people using to buy, sell or hold? I'll put my cards on the table: 60/40 index portfolio and rebalance when that deviates by +/-5%....I would completely ignore Fundsmith.
    “So we beat on, boats against the current, borne back ceaselessly into the past.”
  • Prism
    Prism Posts: 3,797 Forumite
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    Audaxer wrote: »
    I would think it is a bad time to move into something like Fundsmith just because it has had such good gains up until now. If you like the performance of that fund, I think it would be better to move 20% into it after an equity crash when it maybe would have incurred a bigger fall than the VLS80.

    I am invested in Fundsmith because I would expect it to out perform the VLS80 during a crash even after all of that previous gain. Although it is one of the strongest global growth funds out there it is also one of the most defensive.
  • TBC15
    TBC15 Posts: 1,452 Forumite
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    edited 10 December 2017 at 1:54AM
    Prism wrote: »
    Works for me. I have over 50% in Fundsmith. I like the return but I mainly like the investment style

    And there was me thinking I was over exposed at 35%. I’m also a fan of Terry Smiths investment style.
    After 5yrs of investing with Fundsmith a crash of 50% would see it still worth more than VLS 80 before the crash, and VLS80 would be far from tear free.
  • firestone
    firestone Posts: 520 Forumite
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    edited 10 December 2017 at 2:04AM
    While a concentrated fund it can be a bit risky and has had a few down periods in with the very good,but i believe Terry Smith runs it with a view to long term growth a bit like a pension fund which i think is his background so long term i don't think you would go that wrong taking a chance(he also invests his own money so guess he has an incentive)
    I also have a lump sum in it as well as trackers which i drip feed into as i think their ups & downs suit a monthly plan (could be wrong but just what i like)
    Not sure how much 20% is to you in money terms and are you looking for a bit of adventure with a small stake or have you seen Fundsmith mentioned a lot as we get to the end of year write ups?You could have enough to do one of the other good global funds as well or look at something with a bit more flavour like Scottish Mortgage which is another favorite of many with a much cheaper fee(but probably more risk)
    If i was only in VLS 80 and was happy and that had been my plan to start all a long,instead of looking at another portion of Global equity i may have looked to have a punt with a small percentage in a satellite fund for something to follow with interest in a cheap etf or tracker in tech,health,robotics etc.You could even look at water,timber or environmental which could be future trends
  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
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    edited 10 December 2017 at 2:11AM
    bostonerimus wrote: »
    You could have said the same thing a year ago.

    I avoid using hindsight when investing as has no bearing on the future. With a fund approaching £10 billion. Going to get harder to find (and buy enough stock of) investments that can deliver a major contribution to the fund. Any reversal of exchange rate trends is going to take the shine away completely.
  • Prism
    Prism Posts: 3,797 Forumite
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    TBC15 wrote: »
    And there was me thinking I was over exposed at 35%. I’m also a fan of Terry Smiths investment style.
    After 5yrs of investing with Fundsmith a crash of 50% would see it still worth more than VLS 80 before the crash, and VLS80 would be far from tear free.

    Yeah even though I like it I'm not sure I should go any higher. I have a good chunk of my pension in it and a few years of ISA payments too. I treat it as my safe fund. Next year i'll probably go for something else for some balance - maybe Lindsell Train or a US tracker
  • bostonerimus
    bostonerimus Posts: 5,617 Forumite
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    The thing that would worry me about owning Fundsmith is it's focus......less than 30 holdings? So maybe it''s a good compliment to VLS80? or maybe it isn't and it's just done well in a bizarre market and might get into trouble (a la Woodford) if just a few of those 30 holdings see reversals.
    “So we beat on, boats against the current, borne back ceaselessly into the past.”
  • firestone
    firestone Posts: 520 Forumite
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    edited 10 December 2017 at 10:59AM
    Thrugelmir wrote: »
    I avoid using hindsight when investing as has no bearing on the future. With a fund approaching £10 billion. Going to get harder to find (and buy enough stock of) investments that can deliver a major contribution to the fund. Any reversal of exchange rate trends is going to take the shine away completely.
    Its going to take a big reversal of any sort to take the shine completely away,may be some but not all.The trouble with the past is no guide to the future idea is it could stop you using any fund that has done well over a long time I.e over the same timescale as Fundsmith the Baillie Gifford Global Alpha Fund has also been a strong performer and one i may switch too but if the OP does not want to take a chance on an active fund as it may not do as well again then there back to their VLS choice
  • pip895
    pip895 Posts: 1,178 Forumite
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    If you are going to compliment VLS with something, wouldn't something not really covered by VLS e.g. small companies or property, fit better?

    I'm predominantly in active funds but I never let any one active fund go over 10% of my portfolio. In your position I might be tempted to make a small portfolio of active funds with the 20% rather than just one fund. Include Fundsmith by all means but it is bound to have periods of underperformance and may be easier to live with if it is sitting beside funds with different strategies and covering complimentary areas of the market.
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