Whts happened to Fundsmith

Thrugelmir

Prism wrote: »

Thats one of the big differences between the Woodford and Fundsmith approaches. Woodford buys what the others don't hoping to be proven correct and Fundsmith buys what everyone else is buying - just more selectively. Both will have their tricky moments, its just that Woodfords arguably takes more skill (or luck) to pull off over the long term.

Guess you haven't been investing very long then. Woodford turned £10k into £250k over a 26 year period while at Invesco Perpetual. That's where his reputation was built.

Fundsmith buys what everyone else is buying - just more selectively

In my personal view sounds like marketing spin for a new Messiah.

Prism

Thrugelmir wrote: »

Guess you haven't been investing very long then. Woodford turned £10k into £250k over a 26 year period while at Invesco Perpetual. That's where his reputation was built.

I am well aware. I was investing passively during that time as the amount was pretty low so completely missed those gains. As I said, he was lucky or skillful. Likely a bit of both. I doubt anyone had any complaints about his time at Invesco. Value investing is hard to do over such a long time period.

In my personal view sounds like marketing spin for a new Messiah.

Not really, a bunch of funds following the same methods over the last 20 years or so have had similar results. All we can say is it still seems to work in the current era.

Johnnyboy11

To be fair the GBP/USD has gone from 1.22 to 1.30 in the last 10 weeks, a 6.6% delta and major headwind for Fundsmith Equity (and LT too). Depending on how things pan out this month, the GBP might be back sub 1.20...

Thrugelmir

Prism wrote: »

Value investing is hard to do over such a long time period.

Buffett has likewise suffered. Investment styles become fads for investors. Value investing is easier in more volatile markets.

Woodford (quite rightly) ignored the Dot Com boom. As a consequence bought solid cash generative stocks at fair prices.

Trackers are flavour of the month currently. With the top 10 (of 1650 stocks) accounting for 13% of the MSCI global index. Investors aren't as diversified as they would imagine. Wind can change direction any minute.

aroominyork

Fundsmith and LT Global Equity have both underperformed a World Index over recent months. If you believe in their strategy of buying and holding quality firms with a proven record then you shouldn't be worrying that the price has fallen recently, you should see this as a buying opportunity.

bostonerimus

With Fundsmith and LT you are buying into the stock picking skill of the managers in a big way. If Smith's metrics for value are off then the fund could see big losses. It won't be as bad as Woodford as there's no unlisted rubbish in there, but its narrow focus means it will probably be more volatile than a fund with greater diversity as shown by its stellar recent performance.

The fund I'd be really worried about is the LT IT as that has 50% invested in LT which is unlisted and anyway it seems a bit incestuous and I'd want to avoid that.

bostonerimus

Thrugelmir wrote: »

Trackers are flavour of the month currently. With the top 10 (of 1650 stocks) accounting for 13% of the MSCI global index. Investors aren't as diversified as they would imagine. Wind can change direction any minute.

Cap weighting in trackers is a legitimate point to make when talking about diversity, but that goes for many active funds too.

Trackers might be flavour of the month in the UK, but they are old hat in the US and my 30 year history with them through several deep cycles convinces me that they can be a winning strategy...of course there are other winning strategies too, but those are for folks who can analyse the internals of funds and then get lucky.

itwasntme001

I think one of the reasons why some like property so much over stocks is because company margins can be eroded away due to competition and in a relatively free economy this can happen quite commonly and quickly too. So you are left with innovation and economic growth to boost stocks. The former may not happen all the time for long stretches of time (at least in any material way) and the later as we know comes in cycles.


At least with property it is leveraged and it correlates well with inflation as it depends with wages which i think is a truer reflection of long term purchasing power which is what you are trying to keep. With stocks generally we have no idea as there is competition/margins and lack of innovation to consider.

AnotherJoe

Sailtheworld wrote: »

If the OP had asked the same question about Woodford some time ago he would've received similar answers..

'Yes entirely usual - nothing to see here..'

'If you need to ask you obviously don't know what you're doing and should stick to Post Office savings'

Woodford had plenty of cheerleaders although the selective amnesia seems to have kicked in recently.

Really? Was there a time when Woodfords funds only fell 1.5% in a day? Those were the days, eh?

Thrugelmir

bostonerimus wrote: »

but they are old hat in the US and my 30 year history with them through several deep cycles convinces me that they can be a winning strategy..

I'm just an old cynic having seen too much with my own eyes in my working life. Never take anything at face value is my mantra.

Share buybacks that enhance EPS (and as a consequence the share price), but load companies with debt are going to be an interesting challenge for many US companies in the years to come. Financial engineering tends not to be for the benefit of ordinary shareholders. More for the executives with their share based incentive schemes.