Lindsell Train Global Equity

Johnnyboy11

Steve182 said:

Looking at the chart it's only really been outperformed by Fundsmith  for the last 1 year out of 5. Fundsmith may have its bad year too..

Thanks, maybe LTGE is having a one-off bad year. From this Morningstar chart, it seems LTGE is struggling to out-perform it's benchmark indices over 5-years, which again leads me to the conclusion it's not worth taking the risk or paying the fee. I really don't like the concentration of the fund into so few stocks, which to me appears to be the root of the problem over the past year.

Johnnyboy11

bowlhead99, who are the "We" that you refer to? Is there an upper caste that I need to be made aware of?

ColdIron

Johnnyboy11 said:

Thanks, maybe LTGE is having a one-off bad year. From this Morningstar chart, it seems LTGE is struggling to out-perform it's benchmark indices over 5-years

I don't have a dog in this game but how did you conclude from a one year chart that it had been struggling for five years?

Johnnyboy11

ColdIron said:

Johnnyboy11 said:

Thanks, maybe LTGE is having a one-off bad year. From this Morningstar chart, it seems LTGE is struggling to out-perform it's benchmark indices over 5-years

I don't have a dog in this game but how did you conclude from a one year chart that it had been struggling for five years?

Click on the 5-year tab on the chart in the link.

ColdIron

Yes, my mistake. It seems to have done well over five years, bar the last few months. Hardly struggling. The ten year chart is even more impressive

Prism

Johnnyboy11 said:

ColdIron said:

Johnnyboy11 said:

Thanks, maybe LTGE is having a one-off bad year. From this Morningstar chart, it seems LTGE is struggling to out-perform it's benchmark indices over 5-years

I don't have a dog in this game but how did you conclude from a one year chart that it had been struggling for five years?

Click on the 5-year tab on the chart in the link.

I'm not sure where that MCSI World line is from (looks like its in dollars), but the FTSE World return over 5 years is 92%

bowlhead99

Johnnyboy11 said:

Steve182 said:

Looking at the chart it's only really been outperformed by Fundsmith  for the last 1 year out of 5. Fundsmith may have its bad year too..

Thanks, maybe LTGE is having a one-off bad year. From this Morningstar chart, it seems LTGE is struggling to out-perform it's benchmark indices over 5-years, which again leads me to the conclusion it's not worth taking the risk or paying the fee. 

Prism said:

Johnnyboy11 said:

ColdIron said:

Johnnyboy11 said:

Thanks, maybe LTGE is having a one-off bad year. From this Morningstar chart, it seems LTGE is struggling to out-perform it's benchmark indices over 5-years

I don't have a dog in this game but how did you conclude from a one year chart that it had been struggling for five years?

Click on the 5-year tab on the chart in the link.

I'm not sure where that MCSI World line is from (looks like its in dollars), but the FTSE World return over 5 years is 92%

It hasn't struggled to beat "its benchmark" over five years. As I mentioned in a previous post, out of 251 funds in the IA Global sector with a five year track record, it was positioned 24th.
Out of 285 with a three year track record, it was 54th. For that shorter three year period, Vanguard's FTSE Global All Cap Index product was 157th. 

As we can see from the Morningstar link, its performance over 5 years was almost 120%, while Morningstar's global fund sector average was only about 80%. As Prism mentions, the FTSE world index (of developed world and advanced emerging markets) was 92% for the period, so that's what you would have got in a marketcap-weighted tracker of the markets that the LT fund is investing in. FTSE's own factsheet for the five years ended September shows 55% for FTSE Emerging and 69% for FTSE Developed; those are in US dollars but you won't double those figures by doing them in sterling - you only add about a sixth, to get to the figure Prism had. Significantly lower than the return from LT Global over the period.

The only chart line you were showing on the Morningstar page which outpaced the LT fund in the last year of the five years to overtake it, was the MSCI ACWI Growth index. It's an index of global companies including emerging markets, with high growth characteristics. It will have included the good returns of Apple and Amazon and Tencent etc; it's what you get if you start out tracking all large companies and then eliminate the returns of the ones that aren't high growth. Something of an unfair comparator to LT which has a mix of growth stocks like PayPal and income stocks like Unilever.

It might be good as a thought experiment but it's not an actual product you could have put your money in five years ago as an alternative to LT Global. You could have used iShares's normal MSCI ACWI ETF, but that would have given you exposure to the whole "all companies world index" and not just the Growth element of it. So your return would only have been ~85% instead of the ~120% with Lindsell Train.

As such, the idea that LT is "struggling to out-perform its benchmark" over a reasonable timescale, is wide of the mark. It's only struggling to beat that artificially constructed index skewed to 'growth' stocks out of the global ones available. Growth stocks finding particularly good economic conditions and well beating value stocks over this particular period, that index would beat a more normal index; and a cap-weighted index being naturally skewed to US markets would have benefited a UK investor due to the the 17-18% appreciation of the dollar against GBP.  It may be the case that neither of those two factors recur over the next five years.

Johnnyboy11 said:

bowlhead99, who are the "We" that you refer to? Is there an upper caste that I need to be made aware of?

Nothing sinister. Simply, "We get a lot of people..."  on the forum from time to time with certain attitudes etc etc, refers to the fact that we (a collective of forum users) encounter people with particular attitudes from time to time - e.g. asking for opinions on something without wanting to engage with the responses because their mind has already been made up.

It can be frustrating to come up with a long point by point response to highlight certain flaws in reasoning to someone who welcomed "any thoughts?" on his five main bullet points, only for that person to not really engage with any of the responses he received. Still, that's how forums work, so nothing personal in my complaint :-)

csgohan4

Have you considered Fundsmith or it's sustainable sister fund which has no oil/gas which is useful in the long run.

I am still mulling on ditching my cheap index tracker for the active funds on offer, SMT is still an option, although maybe the boat has sailed for that one

Johnnyboy11

csgohan4 said:

Have you considered Fundsmith or it's sustainable sister fund which has no oil/gas which is useful in the long run.

I am still mulling on ditching my cheap index tracker for the active funds on offer, SMT is still an option, although maybe the boat has sailed for that one

Yes, Fundsmith Equity currently makes up 16% of my portfolio, compared with LTGE at around 10%. I've avoided SMT, even during the recent dips. I'm thinking of going in the opposite direction and investing mainly in cheap global equity trackers.

csgohan4

Johnnyboy11 said:

csgohan4 said:

Have you considered Fundsmith or it's sustainable sister fund which has no oil/gas which is useful in the long run.

I am still mulling on ditching my cheap index tracker for the active funds on offer, SMT is still an option, although maybe the boat has sailed for that one

Yes, Fundsmith Equity currently makes up 16% of my portfolio, compared with LTGE at around 10%. I've avoided SMT, even during the recent dips. I'm thinking of going in the opposite direction and investing mainly in cheap global equity trackers.

To be honest when I started out investing about less than 6 months ago, cheap index trackers were a no brainer, as time has gone on, I've done more research and more comfortable and added satellites to cover both sectors and geography of my choosing. 

The passive investor in me says to stick my trackers, but I wonder if using active funds will yield better results, even LTGE has done better than my vanguard cheap tracker, but obviously comes at a higher OCF cost. 

SMT is an option, but I've come to realise, timing the market will only end in failure. I will probably go for a fundsmith or add more sectors to my portfolio. 

As Thrug mentions, today's winner's could be tomorrow's losers, I will rather back something which will be neither but obviously better than the cheap index trackers

Interesting your doing the opposite of what I am considering, moving from an active fund to passive. Do you feel that the risk/performance would be better balanced in a global index tracker.  

While I appreciate no fund is risk free, the global trackers are a safer bet, than an active fund, woodford being a prime example