Terry Smith puts money where his fund is

StevieJ

Interesting new fund?

The Fundsmith Equity Fund will be the main investment vehicle for Mr Smith's own investments, but will be open to outside investors with a minimum investment of £1,000.
Launching the business, which will charge a flat annual fee of 1pc, roughly one-third of the industry average, Mr Smith compared it to past low-cost start-ups such as Direct Line Insurance and Ryanair

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/8102848/Terry-Smith-puts-money-where-his-fund-is.html

Rollinghome

StevieJ wrote: »

Mr Smith compared it to past low-cost start-ups such as... Ryanair.

Somehow I don't find that especially reassuring.

purch

I'd stand behind Terry Smiff if a fight broke out.

Not sure if I'd give him my ££ to look after however (unless you don't mind him spending it on copious amounts of Bollinger)

P.S. Where is the 'coverage' from HL ???

Reaper

I like the concept of low management charges plus there is no initial fee. Also at long last you don't get fleeced if you apply direct. The AMC is 1% if you go direct and 1.5% if you go via intermediaries. That's much clearer and fairer and means people don't have to faff around with discount brokers (I bet HL hate it).

In the end though what really matters is the performance and being a new fund you will have to base that on your views of Terry Smith as a manager.

P.S. His web site is here. Still rather work in progress.

Reaper

I just checked and the TER is 1.25% (for the normal T class), so very reasonable but I don't think it is really a third of the industry average as claimed in the Telegraph article.

Rollinghome

Despite the hype it looks not disimilar to the industry norm, i.e. 1% AMC or 1.5% (1% plus 0.5% for trail) if bought through an intermediary. Identical to funds with a decent track record such as Troy Trojan: 1.00% AMC for class O with minimum of £1000 bought direct or 1.5% AMC for class I bought from H-L.

And it isn't what Merryn Somerset Webb expected as published on Smiffy's own website http://www.terrysmithblog.com/straight-talking/2010/09/a-rude-awakening-for-funds-merryn-somerset-webb.html

Merryn Somerset Webb:
"He is, says Financial News, about to launch a new venture, Fundsmith, with the aim of undercutting everyone else on fees.

There isn't much more detail than this yet. But if Smith is going to get out there and do some straight talking, we're in for a treat.
If we're really lucky, he'll point out that the fee structure invented by fund management firms is an outrage.

He will rail against the idea that management fees should be a percentage of the funds under management – so they go up automatically as new investors join, regardless of performance."

The similarities with Ryanair are becoming more apparent.