Fundsmith 2018 ASM

pawlala

Aletank wrote: »

Just watched, I was going to move some funds away to another fund as I'm over weight in Fundsmith but I'm not sure now :undecided

How much is 'overweight' to you?

Prism

pawlala wrote: »

How much is 'overweight' to you?

I can't speak for Aletank but I have about 70% of my equites in Fundsmith, FEET and Smithson

DennisTenus

Prism wrote: »

I can't speak for Aletank but I have about 70% of my equites in Fundsmith, FEET and Smithson

Aren't they all run by Terry and his team? Thats a high percentage! Isn't that a bit risky?

Prism

DennisTenus wrote: »

Aren't they all run by Terry and his team? Thats a high percentage! Isn't that a bit risky?

I wouldn't say so. It depends what risk you mean I guess. Volatility is low enough. There are over 100 companies across those funds and the highest percentage is about 2% when the three funds are combined. I wouldn't say the strategy is high risk, but actually quite defensive.

Aletank

Prism wrote: »

I can't speak for Aletank but I have about 70% of my equites in Fundsmith, FEET and Smithson

It was this time last year I posted that comment and i wasn't far off 100% in Fundsmith or spread over 28 shares as i put it at the time !
I've since split equally between Fundsmith, LTGE and BG American and recently started putting all new monies into Smithson (£210 a month).

Alexland

Prism wrote: »

I wouldn't say so. It depends what risk you mean I guess. Volatility is low enough. There are over 100 companies across those funds and the highest percentage is about 2% when the three funds are combined. I wouldn't say the strategy is high risk, but actually quite defensive.

But aren't you even slightly concerned that many of the companies have very similar characteristics so your investment style isn't very diversified? Different styles have different prospects in different market conditions.

Alex

talexuser

The section of the AGM about downturns is quite interesting since back tracking Fundsmith showed it to be very defensive in the relative loss compared to indexes and world fund equivalents.

DennisTenus

Alexland wrote: »

But aren't you even slightly concerned that many of the companies have very similar characteristics so your investment style isn't very diversified? Different styles have different prospects in different market conditions.

Alex

Exactly, and it's almost all eggs in one basket with same fund manager etc

Prism

Alexland wrote: »

But aren't you even slightly concerned that many of the companies have very similar characteristics so your investment style isn't very diversified? Different styles have different prospects in different market conditions.

Alex

It doesn't worry me anywhere nearly as something like SMT (which I also hold), which is very much high growth and consumer discretionary with a bit of tech and healthcare.

In comparision Fundsmith is pretty balanced across the sectors, although it goes for defensive companies in those sectors - basically ones that make money in almost all conditions. I would say its pretty diversified considering the relatively few holdings. In strong bull market when banks and commodities do well it will underperform I guess. That doesn't seem to have happened for a while - I imagine if |Fundsmith had been around during 2003-2007 it would have done pretty badly. Then again it would barely have dropped during the financial crisis

short_butt_sweet

talexuser wrote: »

The section of the AGM about downturns is quite interesting since back tracking Fundsmith showed it to be very defensive in the relative loss compared to indexes and world fund equivalents.

perhaps it was in the last downturn or two, but the next one might be very different. just like the generals are usually prepared to fight the last war, not the next one.

also, the fund didn't exist at the time of the last downturn. so what it did in the downturn is just theoretical. how well would a fund using a strategy that was absolutely crushed in the last downturn sell? not very. but it might be the perfect strategy for the next downturn, for all we know.

i know smith was managing other investments (his company's pension fund?) before he started selling a fund to the public. but ...

1) is there publicly available data about holdings and performance for his pre-public investment record? i'm sure he wouldn't lie about it, but he's a good salesman, and you can tell a good story by giving selective information.

2) other people have managed pension funds, had less spectacular results, and then not gone on to sell a fund to the public. if we're going to accept non-public investments as evidence of investing ability, then the pool of investors is even larger, and so the problem of survivorship bias is even larger.

i remain agnostic on terry smith's investing skills. he clearly has a very definite style, and that means that holders of his funds must expect (even if he is highly skilled) that there will be periods of serious underperformance of the market; because no style outperforms all the time.

will you hold on when that happens, or sell? if you'd sell, then you really shouldn't be holding his funds in the first place (or should be holding a smaller amount, which you might find it easier to hold on to in a bad patch).

i'm also puzzled about the enthusiasm for smithson, which AIUI terry smith isn't actually managing, just "overseeing" the managers in some way. even supposing he's a skilled fund manager, is there any reason to think that will also make him a good manager of other fund managers? is there even any reason to believe that the quality of the managers of fund managers impacts their performance?