Smithson Investment Trust

iglad

I have some money in Baillie Gifford American and they seemed to have hit a brick wall after many years of stellar performance. I have made a few quid with them so I'm looking to sell. I also have SMT, LTG, FS so BG America is just unneeded overlap.

As I don't have any global mid-cap-small company in my portfolio I have been eying Terry Smith's new Investment trust as it seems to be doing very well at the moment.


Any thoughts?

Linton

BG American has hardly "hit a brick wall". It is now at its highest price ever after having achieved twice the return of the S&P 500 over the past 2 years despite a significant temporary fall in the meantime. Over the past 1 year it has equalled the S&P 500. If you want investment in the US I suggest you stay with it.


Whether global small cap is worth investing in is independent of how well partuicuklar funds have recently performed. You need to be thinking long term. Personally I do not like Global Small Cap as I believe that successful Small Cap investing benefits from good local knowledge. Baillie Gifford American is over 50% small and medium cap anyway.

schiff

iglad wrote: »

As I don't have any global mid-cap-small company in my portfolio I have been eying Terry Smith's new Investment trust as it seems to be doing very well at the moment.


Any thoughts?

Strictly speaking it isn't purely Terry Smith's; a couple of his acolytes run it but with his oversight. I've been in it since the float and the price increase has been excellent - up 26% in nine months. Whether that continues remains to be seen but even if it treads water I'm doing OK!

cloud_dog

We hold it but it is on a large premium.

schiff

Incidentally, Charles Stanley have dropped Fundsmith Equity from its buy list on the basis it has become too big! per Trustnet.

iglad

It's performance over the year has been poor and I say this looking at performance tables and BG American is on page 3 and two trackers have better performances over the same period. It hasn't even beaten the the sector benchmark I am of the feeling it's lost it's way and it could take a while to get back on track. I may as well put the money into one of the trackers which are beating it.

Also from what I've read it's large Cap fund and I can't see anything regarding small and mid-cap at all, what am I missing here?

iglad

Large premium it's about 2.6% which is fine by me for a large premium you are talking Lindsell Train Inv Trust!!

Linton

iglad wrote: »

It's performance over the year has been poor and I say this looking at performance tables and BG American is on page 3 and two trackers have better performances over the same period. It hasn't even beaten the the sector benchmark I am of the feeling it's lost it's way and it could take a while to get back on track. I may as well put the money into one of the trackers which are beating it.

Also from what I've read it's large Cap fund and I can't see anything regarding small and mid-cap at all, what am I missing here?

Funds dont "lose their way", at least not often. What happens is that many funds specialise in particular aspects of the market or in a particular investmnent strategy. At times one may perform very well at other times it wont. In the past 12 months BG America returned 11.5% and an S&P500 tracker 14.6%. In the previous 12 months BG-America:43.3%, S&P500 tracker: 15.1% etc etc Who knows what will happen next year. Basing your next years investing on last years performance is unlikely to be a successful strategy. Its the long term that matters.

Morningstar is the best source for fund holdings analysis. See:http://www.morningstar.co.uk/uk/funds/snapshot/snapshot.aspx?id=F0GBR0506U&tab=3 and look at "portfolio".

Trustnet is very good for charting performance. Try https://www.trustnet.com tools charting and plot BG America against an ETF S&P 500 tracker. The picture will say all that needs be said.

iglad

I get what you say but you could have said the very same about Woodford's funds it's long term. I believe in long term as long as they are performing well.

What I find very strange is how badly the BG American has gone off the boil form top dog to an also ran I need to dog a bit deeper into their strategy and find out what has been happening.

Filo25

I actually hadn't realised they had so much mid and small cap in the BG American, had thought of it being a large cap growth fund with just the usual names in there, maybe a fund I need to keep an eye on a bit more.

Although I always get that nagging doubt about buying into the BG house investment style, when it feels like we may be pretty late cycle now (although let's be honest it has felt like pretty late cycle for a while now!)

Linton

iglad wrote: »

I get what you say but you could have said the very same about Woodford's funds it's long term. I believe in long term as long as they are performing well.

What I find very strange is how badly the BG American has gone off the boil form top dog to an also ran I need to dog a bit deeper into their strategy and find out what has been happening.

I dont think Woodfords problem was "going off the boil". It was simply that his strategy was to invest in small companies. This gave rise to two problems:
- in the past year or so in UK, Europe, and Japan and to a lesser extent the US Small Companies have performed unusually poorly compared with large ones. Why this happened I do not know - perhaps world political and economic uncertainty has led to a movement to safer investments. Woodfords initial losses were no worse than other funds in that sector. However this spooked his largely financially naive customer base who did what naive investors always do ie sell in a panic. An experienced investor would know that Woodford is a niche fund and would expect good and bad years compared with the wider market.

- his fund became far too large for his investment universe. So quality and liquidity had to fall.


In general how funds behave has little to do with the golden fingers of the manager and almost everything to do with the type of investments the fund chooses to invest in. When choosing a fund for your portfolio you should focus on that aspect in order to ensure that the investment enhances the diversification of the portfolio as a whole. The best you can do is to look at long term trends and skew your allocations accordingly.