The market times you even when you don’t try to time it

Sue58

OP would you mind me asking why you are changing to the Fundsmith Sustainable fund? Is it purely an ethical decision? I only ask because the holdings are not really that different apart from Tobacco (Philip Morris etc) and the charges are slightly higher for the Sustainable fund.

Linton

Stargunner said:

If you want to chop and change your funds regularly you should just buy investment trusts or etf’s as then you don’t need to be out of the market for a day or 2.

Trading ITs regularly is not a good idea as stamp duty represents a guaranteed loss not very different to faily market movements.

aroominyork

Sue58 said:

OP would you mind me asking why you are changing to the Fundsmith Sustainable fund? Is it purely an ethical decision? I only ask because the holdings are not really that different apart from Tobacco (Philip Morris etc) and the charges are slightly higher for the Sustainable fund.

Purely ethical. I can no longer stare at Philip Morris being the third largest holding. Anyone who thinks heat not burn technology is a harm reduction measure might have a read of this paper. Do you think Fundsmith would invest in tobacco if there were not strong profits ahead? I'm also happy not to invest in Facebook, which the Sustainable fund seems to avoid.

aroominyork

I thought I’d share my experience of the ‘insurance policy’ I used to avoid market moves while out of the market between selling Fundsmith Equity and buying Fundsmith Sustainable. I was moving about £65k split £31k, £23k and £11k in my and my wife’s ISAs/SIPPs.

Monday. Move £32k from Marcus (via bank) to Interactive Investor trading account and place a buy order for Fundsmith Sustainable. Place sell orders on the £23k and £11k Fundsmith Equity.

Tuesday. Place buy orders with the released £23k and £11k for Fundsmith Sustainable. Place sell order for £31k Fundsmith Equity.

Wednesday. Place buy order with the released £31k for Fundsmith Sustainable. Place sell order for the £32k (trading account) Fundsmith Sustainable.

Thursday. Place withdrawal order for £32k from the trading account. This was now worth £32,730 but I could only withdraw £32k; I assume the gain is released after the settlement date.

Friday. Funds will be received and reinvested in Marcus.

What I would have done otherwise would be to sell Fundsmith Equity on Monday and buy Fundsmith Sustainable on Tuesday. They rose about 0.7% on Tuesday which, on £65k, would have been £455. So on this occasion the insurance policy worked for me and my ‘premium’ cost five days’ interest on Marcus and two extra trading fees, about £12 in total.

aroominyork

A postscript to this story. Yesterday I noticed the cash in my trading account was lower than expected. It turns out Interactive Investor took over £50 as an interest fee because, when I withdrew £32k on the Thursday, the Fundsmith Sustainable sale had not yet reached the settlement date so I  was essentially overdrawn. I phoned and grumbled and they have reversed the fee, but I'll know in future not to withdraw funds until the settlement date, even if the system allows me to.

MaxiRobriguez

"Almost every time I’ve been out of the market it has risen in that day and has cost me"

Not sure why you're surprised. 

The average day stocks/funds will be ticking upwards ever so slightly, so if you're out of the market for a day then it will come at a cost.

This isn't luck it's just how the market works - long periods of small gains, short periods of rapid sell-offs.