Defensive Global IT's/funds

aroominyork

Reluctantpensioner wrote: »

The morningstar analyst reports on the funds you mention. Specifically the "role in portfolio" section:

Lindsell Train Global Equity Fund:
The highly concentrated nature of the portfolio, combined with its structural active sector positions, make this fund most suitable as a supporting player.

Fundsmith Equity I:
Core. The fund is suitable for investors seeking a low-beta approach to global equity investing.

It is interesting that Fundsmith and LTGE - so often seen as similar - are separated out here, with for former seen as core and latter as supporting. Is that (please, experts?) because Fundsmith covers more sectors - is that what is meant by LT's "structural active sector positions", ie its focus on media and personal goods/consumption, perhaps more B2C than Fundsmith's mix of B2B and B2C?

In terms of beta/risk, on a 5 year view on Citywire LTGE is slightly lower risk - 377th out of 460 global equity funds, compared to Fundsmith's 400th position. Fundsmith's FE score is 110 which doesn't seem so low-beta.

bowlhead99

aroominyork wrote: »

I
In terms of beta/risk, on a 5 year view on Citywire LTGE is slightly lower risk - 377th out of 460 global equity funds, compared to Fundsmith's 400th position.

I wouldn't read much into that then. The difference is only slight, at 10.89 vs 10.73. Both are a lot more than the ones in the 5-8 range and a lot less than the ones in the 15-20 range. But without fully understanding the measure it is difficult to comment.

Fundsmith's FE score is 110 which doesn't seem so low-beta.

Well it is 1.1 times the FTSE 100 rather than 2 or 3 times the FTSE 100. Given over 80% of its investments are overseas, that doesn't seem particuarly high volatility. However, those FE risk scores are skewed towards the activity in more recent time periods and are sensitive to how volatile the FTSE (benchmark risk score of 100) actually happens to be over the period of review.

You mentioned it being 400th lowest volatility in the Citywire global funds basket over 3 years; HSBC FTSE All World Tracker is 441 on that list.

But neither LT nor Smith are building funds to be a particular target level of volatility, they are buying company types they like which they think will give them the performance they would like for the cost/risk they are willing to take, and the volatility will just be what it will be.

ArchBair

Reluctantpensioner wrote: »

You said you were looking for a "core holding".
I'm not remotely an expert: but you might be interested in the opinion of some who are respected... The morningstar analyst reports on the funds you mention. Specifically the "role in portfolio" section:

Lindsell Train Global Equity Fund:
The highly concentrated nature of the portfolio, combined with its structural active sector positions, make this fund most suitable as a supporting player.

Fundsmith Equity I:
Core. The fund is suitable for investors seeking a low-beta approach to global equity investing.

FRCL:
Core. The fund offers a well-diversified portfolio comprising predominantly quoted global equities with an element of private equity exposure. The fund is suitable as a core building block for portfolios and has demonstrated steady outperformance with lower risk. Modestly geared, it would be a good choice for a first-time investor seeking long-term global equity exposure.

MWY:
Satellite. The trust offers investors a relatively concentrated global portfolio, structured without heed of the benchmark, with the aim of capturing structural growth in global thematic trends such as the emerging-markets consumer or retiree spending power.

SMT:
Supporting. Whilst the fund nominally provides exposure to global equities, investors should be cognisant that the highly active nature of the management, the inclusion of unlisted investments, structural gearing, and a relatively concentrated portfolio are likely to lead to a bumpy ride at times. Investors should consider this a long-term investment and part of a wider diversified portfolio.

I have a few of these in my portfolio, but I don't generally treat them as core.

The Morningstar analyst stated that Fundsmith is a low-beta global equity fund and can be held as the core of a portfolio. This seems totally at odds to Citywire who have a different opinion on the beta level of this fund so who's right?

aroominyork

ArchBair wrote: »

The Morningstar analyst stated that Fundsmith is a low-beta global equity fund and can be held as the core of a portfolio. This seems totally at odds to Citywire who have a different opinion on the beta level of this fund so who's right?

Bowlhead has explained that the risk level may not be as extreme as a cursory glance at Citywire suggests. Re-read and digest his post. Also, here’s a link to an entertaining interview with Nick Train (Brian Blessed look out!).

StellaN

Reluctantpensioner wrote: »

You said you were looking for a "core holding".
I'm not remotely an expert: but you might be interested in the opinion of some who are respected... The morningstar analyst reports on the funds you mention. Specifically the "role in portfolio" section:

Lindsell Train Global Equity Fund:
The highly concentrated nature of the portfolio, combined with its structural active sector positions, make this fund most suitable as a supporting player.

Fundsmith Equity I:
Core. The fund is suitable for investors seeking a low-beta approach to global equity investing.

FRCL:
Core. The fund offers a well-diversified portfolio comprising predominantly quoted global equities with an element of private equity exposure. The fund is suitable as a core building block for portfolios and has demonstrated steady outperformance with lower risk. Modestly geared, it would be a good choice for a first-time investor seeking long-term global equity exposure.

MWY:
Satellite. The trust offers investors a relatively concentrated global portfolio, structured without heed of the benchmark, with the aim of capturing structural growth in global thematic trends such as the emerging-markets consumer or retiree spending power.

SMT:
Supporting. Whilst the fund nominally provides exposure to global equities, investors should be cognisant that the highly active nature of the management, the inclusion of unlisted investments, structural gearing, and a relatively concentrated portfolio are likely to lead to a bumpy ride at times. Investors should consider this a long-term investment and part of a wider diversified portfolio.

I have a few of these in my portfolio, but I don't generally treat them as core.

I would be more comfortable with FRCL as my core holding in a SIPP rather than Fundsmith but purely because of far more diversification.

bostonerimus

Sally57 wrote: »

I've decided to have only 20% as my main holding in the SIPP and have selected Foreign & Colonial Investment Trust. The remaining 80% I am looking at the following:-

Scottish Mortgage (SMT) - 10%
Jupiter European Opps (JEO) - 10%
Schroder Asia Pacific (SDP) - 10%
TR Property (TRY) - 10%
Capital Gearing (CGT) - 10%
Allianz Technology (ATT) - 5%
Worldwide Healthcare (WWH) - 5%
Henderson Smaller Companies (HSL) - 5%
JPMorgan US Smaller Companies (JUSC) - 5%
JPMorgan Euopean Smaller Companies (JESC) - 5%
Baillie Gifford Shin Nippon (BGS) - 5%

The reason I am light on the bond/property element with Capital Gearing & TR Property is because I have a adequate amount in cash in the best interest accounts/RS's as a fallback in case of a downturn/crash.

Frankly I think portfolios like this are bound to produce ulcers and anxiety in the owner rather than financial success. I can't see "the wood for the trees" in such portfolios. So many small allocations to manage....are you going to keep the percentages constant over time?

Alexland

aroominyork wrote: »

Also, here’s a link to an entertaining interview with Nick Train (Brian Blessed look out!).

It's a bit worrying he holds Unilever is because he loves Marmite.

Having watched a few of his videos on YouTube he's clearly a bit mad.

Alex

aroominyork

Alexland wrote: »

It's a bit worrying he holds Unilever is because he loves Marmite.

Having watched a few of his videos on YouTube he's clearly a bit mad.

It's his wildlife impersonation just after 4m40s which makes me laugh most. Anyway, I'm married to an Aussie so the 'M' word is banned - I may have to sell my LTUK.

Prism

bostonerimus wrote: »

Frankly I think portfolios like this are bound to produce ulcers and anxiety in the owner rather than financial success. I can't see "the wood for the trees" in such portfolios. So many small allocations to manage....are you going to keep the percentages constant over time?

You probably wouldn't even try and keep the percentages constant. I don't have quite as many funds but its still almost impossble to get the allocations right so I just stick to ballpark percentages and just let them grow. For example I might say 10-20% UK, but don't have a particular preference about if that is large or small cap or where those companies get their earnings from.

You also get stuff like Unilever. Lets say that this year they move to the Netherlands. Lindsell Train wil suddenly drop 10% UK exposure and get an extra 10% Europe. Should this mean that we should rebalance next time round to compensate for that? I'm pretty sure that Nick Train won't care as he has already said he doesn't believe in rebalancing or top slicing just for the sake of it. Unilever makes most of its money in emerging markets anyway so it doesn't really matter I guess.

Trying to define regional allocations, risk levels (bonds vs equites) and company valuations is mostly guesswork anyway so I am of the mind to let things run until you get uncomfortable.

Alexland

aroominyork wrote: »

It's his wildlife impersonation just after 4m40s which makes me laugh most. Anyway, I'm married to an Aussie so the 'M' word is banned - I may have to sell my LTUK.

You may want to sell Fundsmith too after this nutty video on their official YouTube channel. I didn't realise British industrialists still existed.

https://m.youtube.com/watch?v=6X54oNrd0Aw