Fundsmith Equity - Opinions

bowlhead99

Unbiased research is clearly the type of research that people should be using. There is plenty of biased research out there funded by people with a vested interest in the result, both on the passive and actively managed side of the fence, and it can be hard to sort the wheat from the chaff.

If you're looking for a particular result, you can find it, and the person from the other 'camp' will say "ah but xyz blah blah blah" and refuse to believe your stance is not a blinkered one driven by a personal conviction, instead contending that the theory that they themselves bought into is the best one to hold. We see that time and time again on the boards.

Re Fundsmith: there's​ no doubt that going heavy on "consumer defensive" type equities (or those with similar properties) and heavy on allocations to USA - at a time when those areas did particularly well for investors​ faced with a low interest environment (and weakening sterling), with US markets pushing up to all time highs more consistently than some of the other world markets, has been a good thing for Smith to have done. His high conviction approach has worked out well.

However, he is not the type of guy to radically change his convictions and so the approach that he likes to take will obviously do relatively less well when the market conditions don't support it - so to assume he will continue his outperformance of other globally allocated funds when faced with very different conditions, is probably shortsighted.

FWIW I do quite like Smith, he talks a lot of sense from time to time. I don't hold his fund.

redux

bowlhead99 wrote: »

FWIW I do quite like Smith, he talks a lot of sense from time to time. I don't hold his fund.

I'm occasionally reading bits of his famous or infamous book Accounting for Growth, which I found cheap secondhand on Amazon. I remember looking at it new in WH Smith years ago and not quite buying it then.

If anyone doesn't know what it's about then the book subtitle gives a hint: Stripping the Camouflage from Company Accounts

BananaRepublic

bowlhead99 wrote: »

FWIW I do quite like Smith, he talks a lot of sense from time to time. I don't hold his fund.

I always ignore what the fund managers say, as the saying goes, fine words butter no parsnips. The five year performance is excellent, but as you say, it remains untested in challenging market conditions. However, I don't doubt he is aware that the markets are perhaps overvalued, or at least due for a correction.

StellaN

Even though Fundsmith has not been tested in different market conditions, I feel his strategy and philosophy of only holding very well established, successful and high quality companies will prevail. Obviously, because he is mainly invested in the US and UK, and, if these regions are badly effected in the world market then his fund will take a nosedive, however if you are invested for the long term then they will also eventually bounce back.

As long as your other funds are selected to diversify into other regions and sectors then I am comfortable in holding this fund in my portfolio. Also, as I mentioned before another big plus is that he invests his own money into the fund!

StellaN

AnotherJoe wrote: »

It very much depends what your overall strategy is and how they would fit into that. Not exactly "funds" as they are ITs but how about Scottish Mortgage Trust and Foreign and Colonial?

I own a fair chunk of Fundsmith because I like the strategy and its an outlier to my more general global trackers, I have a few active funds 'topping up' my mostly trackers in my SIPP. Its also mostly outside the UK which makes it a Brexit-antidote.

And yes its high but then again any good fund will often be high or it wouldn't be a good fund

That's exactly what I've done AJ. I split my global holdings between Fundsmith and Scottish Mortgage IT, mainly because they were different enough to compliment each other and if either suffered I can always rebalance between the two.

I did consider F&C as well as Alliance Trust and Witan before finally deciding on SMT.

fairleads

kidmugsy wrote: »

What's your evidence that it's biased?

My 50 yrs of investing experience.

AnotherJoe

fairleads wrote: »

My 50 yrs of investing experience.

That's not very conclusive. That means you disagree with the answers, but not why you think they are biased, or what the evidence they are biased is, unless you think the fact that anyone that disagrees with you proves by definition they are biased.

grey_gym_sock

AnotherJoe wrote: »

That's not very conclusive.

you're being too kind, really ... what on earth does 50 years of investing experience have to do with whether some (unspecified) research is biased?

the blanket claim that all research (which implies that passive is better than active) is biased is obviously wrong. that covers a huge amount of research. certainly some if it is biased. no way that all of it is.

and disagreeing with the conclusions of a huge body of research, which actually doesn't all say the same thing, just broadly similar things, is barely meaningful. it is certainly possible to disagree with some specific kinds of passive-beats-active thesis, but which one(s) are you disagreeing with? you haven't said.

and whatever you want to disagree with, "experience" is just a meaningless handwave, not an argument. an argument requires data (which could, at least in theory, be derived from your investing experience), and an explanation of how your data is statistically significant (which, in practice, is not going to be the case, if the data is from 1 investor's career: it's simply not enough data).

fairleads

What i'm saying is that my yrs of investing experience, of choosing asset/fund managers based upon their past performance, has provided good index beating returns.
How do you guys choose your fund managers?

Sally57

StellaN wrote: »

That's exactly what I've done AJ. I split my global holdings between Fundsmith and Scottish Mortgage IT, mainly because they were different enough to compliment each other and if either suffered I can always rebalance between the two.

I did consider F&C as well as Alliance Trust and Witan before finally deciding on SMT.

That's interesting because I'm considering Alliance Trust or Witan to go with my global OEIC.