Retirement Planner - Importance of Inflation?

Prism

Linton said:

Prism said:

Deleted_User said:

Just checked Fundsmith equity class 1 acc. Only been around for 5 years (!). Outperformed the benchmark for the first 3. Underperformed for the last 2.  Global Large cap as a category did have great 10 years. Long term it has underperformed small.  And one big reason last 5 years look so good is you measuring in GBP and GBP losing 20%.

I'm not sure which stats you have seen but Fundsmith has been around for 10 years and outperformed MCSI World every year except for 2016 when it equalled it. Trustnet is giving a total return of 436.9% over those 10 years. Global Index funds have done around 152% over that time. The GBP drop has certainly helped returns but 10% isn't really here nor there over the last 5 years - its around 20% over 10 years.

Question marks over if MCSI World is a fair benchmark since Fundsmith only really invests in three sectors but I can't think of a better one, partly since those three sectors are not fixed weights. Impossible to know if that performance continues but I have a large chunk of my money betting on it

According to Morningstar Fundsmith uinderpeformed the "MSCI ACWI Large Cap Growth Index " in 2019 and in 2020 to date.  Prior to then it wildly out-performed it. 

10 year perfomance
Fundsmith 18.3% annually=437% cumulative
Index: 13.87% annually=267% cumulative

But the question is only of academic interest anyway as it seems that according to MSCI there are no ETFs that track the index.

See: https://www.morningstar.co.uk/uk/funds/snapshot/snapshot.aspx?id=F00000LK2Q&tab=1

Ah yes. Last year Morningstar shifted a bunch of the global funds from the blended category to the growth category, which seems fair but then also retrospectively changed their benchmark to the growth index that no index funds track. 

Fundsmith themselves have always claimed not to follow any benchmark but then listed MCSI World as a possible comparison. I guess the same would apply for many active global funds that look nothing like the index.

Linton

Prism said:

Linton said:

Prism said:

Deleted_User said:

Just checked Fundsmith equity class 1 acc. Only been around for 5 years (!). Outperformed the benchmark for the first 3. Underperformed for the last 2.  Global Large cap as a category did have great 10 years. Long term it has underperformed small.  And one big reason last 5 years look so good is you measuring in GBP and GBP losing 20%.

I'm not sure which stats you have seen but Fundsmith has been around for 10 years and outperformed MCSI World every year except for 2016 when it equalled it. Trustnet is giving a total return of 436.9% over those 10 years. Global Index funds have done around 152% over that time. The GBP drop has certainly helped returns but 10% isn't really here nor there over the last 5 years - its around 20% over 10 years.

Question marks over if MCSI World is a fair benchmark since Fundsmith only really invests in three sectors but I can't think of a better one, partly since those three sectors are not fixed weights. Impossible to know if that performance continues but I have a large chunk of my money betting on it

According to Morningstar Fundsmith uinderpeformed the "MSCI ACWI Large Cap Growth Index " in 2019 and in 2020 to date.  Prior to then it wildly out-performed it. 

10 year perfomance
Fundsmith 18.3% annually=437% cumulative
Index: 13.87% annually=267% cumulative

But the question is only of academic interest anyway as it seems that according to MSCI there are no ETFs that track the index.

See: https://www.morningstar.co.uk/uk/funds/snapshot/snapshot.aspx?id=F00000LK2Q&tab=1

Ah yes. Last year Morningstar shifted a bunch of the global funds from the blended category to the growth category, which seems fair but then also retrospectively changed their benchmark to the growth index that no index funds track. 

Fundsmith themselves have always claimed not to follow any benchmark but then listed MCSI World as a possible comparison. I guess the same would apply for many active global funds that look nothing like the index.

Looking at the breakdown of the MSCI Large Cap Growth index it would seem to be very different to Fundsmith.  The Growth Index largest sectors are  35% IT, 16% consumer discretionary and 15% healthcare.  Fundsmith's largest are 30% consumer defensive, 23% healthcare and 17% tech.
The Large Cap Growth Index's focus on tech vs Fundsmiths more defensive tilt would explain the recent outperformance.

BritishInvestor

Linton said:

Prism said:

Deleted_User said:

Just checked Fundsmith equity class 1 acc. Only been around for 5 years (!). Outperformed the benchmark for the first 3. Underperformed for the last 2.  Global Large cap as a category did have great 10 years. Long term it has underperformed small.  And one big reason last 5 years look so good is you measuring in GBP and GBP losing 20%.

I'm not sure which stats you have seen but Fundsmith has been around for 10 years and outperformed MCSI World every year except for 2016 when it equalled it. Trustnet is giving a total return of 436.9% over those 10 years. Global Index funds have done around 152% over that time. The GBP drop has certainly helped returns but 10% isn't really here nor there over the last 5 years - its around 20% over 10 years.

Question marks over if MCSI World is a fair benchmark since Fundsmith only really invests in three sectors but I can't think of a better one, partly since those three sectors are not fixed weights. Impossible to know if that performance continues but I have a large chunk of my money betting on it

According to Morningstar Fundsmith uinderpeformed the "MSCI ACWI Large Cap Growth Index " in 2019 and in 2020 to date.  Prior to then it wildly out-performed it. 

10 year perfomance
Fundsmith 18.3% annually=437% cumulative
Index: 13.87% annually=267% cumulative

But the question is only of academic interest anyway as it seems that according to MSCI there are no ETFs that track the index.

See: https://www.morningstar.co.uk/uk/funds/snapshot/snapshot.aspx?id=F00000LK2Q&tab=1

Might be better to use World rather than ACWI

[Deleted User]

Prism said:

Deleted_User said:

Just checked Fundsmith equity class 1 acc. Only been around for 5 years (!). Outperformed the benchmark for the first 3. Underperformed for the last 2.  Global Large cap as a category did have great 10 years. Long term it has underperformed small.  And one big reason last 5 years look so good is you measuring in GBP and GBP losing 20%.

I'm not sure which stats you have seen but Fundsmith has been around for 10 years and outperformed MCSI World every year except for 2016 when it equalled it. Trustnet is giving a total return of 436.9% over those 10 years. Global Index funds have done around 152% over that time. The GBP drop has certainly helped returns but 10% isn't really here nor there over the last 5 years - its around 20% over 10 years.

Question marks over if MCSI World is a fair benchmark since Fundsmith only really invests in three sectors but I can't think of a better one, partly since those three sectors are not fixed weights. Impossible to know if that performance continues but I have a large chunk of my money betting on it

I looked on Morningstar. Fundsmith underperformed the benchmark last year and is underperforming by quite a bit in 2020.  I made a mistake; it does have 10 years. Also, msci world isn’t the right benchmark. Should be large cap growth. 

https://www.morningstar.co.uk/uk/funds/snapshot/snapshot.aspx?id=F00000LK2Q&tab=1

Linton

BritishInvestor said:

Linton said:

Prism said:

Deleted_User said:

Just checked Fundsmith equity class 1 acc. Only been around for 5 years (!). Outperformed the benchmark for the first 3. Underperformed for the last 2.  Global Large cap as a category did have great 10 years. Long term it has underperformed small.  And one big reason last 5 years look so good is you measuring in GBP and GBP losing 20%.

I'm not sure which stats you have seen but Fundsmith has been around for 10 years and outperformed MCSI World every year except for 2016 when it equalled it. Trustnet is giving a total return of 436.9% over those 10 years. Global Index funds have done around 152% over that time. The GBP drop has certainly helped returns but 10% isn't really here nor there over the last 5 years - its around 20% over 10 years.

Question marks over if MCSI World is a fair benchmark since Fundsmith only really invests in three sectors but I can't think of a better one, partly since those three sectors are not fixed weights. Impossible to know if that performance continues but I have a large chunk of my money betting on it

According to Morningstar Fundsmith uinderpeformed the "MSCI ACWI Large Cap Growth Index " in 2019 and in 2020 to date.  Prior to then it wildly out-performed it. 

10 year perfomance
Fundsmith 18.3% annually=437% cumulative
Index: 13.87% annually=267% cumulative

But the question is only of academic interest anyway as it seems that according to MSCI there are no ETFs that track the index.

See: https://www.morningstar.co.uk/uk/funds/snapshot/snapshot.aspx?id=F00000LK2Q&tab=1

Might be better to use World rather than ACWI

Perhaps but Morningstar give ACWI Growth as the category/ Index against which they compare the fund.

In any case it does not make a lot of difference to the overall picture.

[Deleted User]

Linton said:

BritishInvestor said:

Linton said:

Prism said:

Deleted_User said:

Just checked Fundsmith equity class 1 acc. Only been around for 5 years (!). Outperformed the benchmark for the first 3. Underperformed for the last 2.  Global Large cap as a category did have great 10 years. Long term it has underperformed small.  And one big reason last 5 years look so good is you measuring in GBP and GBP losing 20%.

I'm not sure which stats you have seen but Fundsmith has been around for 10 years and outperformed MCSI World every year except for 2016 when it equalled it. Trustnet is giving a total return of 436.9% over those 10 years. Global Index funds have done around 152% over that time. The GBP drop has certainly helped returns but 10% isn't really here nor there over the last 5 years - its around 20% over 10 years.

Question marks over if MCSI World is a fair benchmark since Fundsmith only really invests in three sectors but I can't think of a better one, partly since those three sectors are not fixed weights. Impossible to know if that performance continues but I have a large chunk of my money betting on it

According to Morningstar Fundsmith uinderpeformed the "MSCI ACWI Large Cap Growth Index " in 2019 and in 2020 to date.  Prior to then it wildly out-performed it. 

10 year perfomance
Fundsmith 18.3% annually=437% cumulative
Index: 13.87% annually=267% cumulative

But the question is only of academic interest anyway as it seems that according to MSCI there are no ETFs that track the index.

See: https://www.morningstar.co.uk/uk/funds/snapshot/snapshot.aspx?id=F00000LK2Q&tab=1

Might be better to use World rather than ACWI

Perhaps but Morningstar give ACWI Growth as the category/ Index against which they compare the fund.

In any case it does not make a lot of difference to the overall picture.

True. Its usual for certain funds / subsections of the market to outperform for 10 years on end. Does not say a thing about the next 10 years.  If anything, its “a bad omen“. 

BritishInvestor

Deleted_User said:

Linton said:

BritishInvestor said:

Linton said:

Prism said:

Deleted_User said:

Just checked Fundsmith equity class 1 acc. Only been around for 5 years (!). Outperformed the benchmark for the first 3. Underperformed for the last 2.  Global Large cap as a category did have great 10 years. Long term it has underperformed small.  And one big reason last 5 years look so good is you measuring in GBP and GBP losing 20%.

I'm not sure which stats you have seen but Fundsmith has been around for 10 years and outperformed MCSI World every year except for 2016 when it equalled it. Trustnet is giving a total return of 436.9% over those 10 years. Global Index funds have done around 152% over that time. The GBP drop has certainly helped returns but 10% isn't really here nor there over the last 5 years - its around 20% over 10 years.

Question marks over if MCSI World is a fair benchmark since Fundsmith only really invests in three sectors but I can't think of a better one, partly since those three sectors are not fixed weights. Impossible to know if that performance continues but I have a large chunk of my money betting on it

According to Morningstar Fundsmith uinderpeformed the "MSCI ACWI Large Cap Growth Index " in 2019 and in 2020 to date.  Prior to then it wildly out-performed it. 

10 year perfomance
Fundsmith 18.3% annually=437% cumulative
Index: 13.87% annually=267% cumulative

But the question is only of academic interest anyway as it seems that according to MSCI there are no ETFs that track the index.

See: https://www.morningstar.co.uk/uk/funds/snapshot/snapshot.aspx?id=F00000LK2Q&tab=1

Might be better to use World rather than ACWI

Perhaps but Morningstar give ACWI Growth as the category/ Index against which they compare the fund.

In any case it does not make a lot of difference to the overall picture.

True. Its usual for certain funds / subsections of the market to outperform for 10 years on end. Does not say a thing about the next 10 years.  If anything, its “a bad omen“. 

"If anything, its “a bad omen“. "
Either it genuinely is different this time (always possible), or we are in the greatest "growth" bubble on record.
https://www.ft.com/content/fc7ce313-92f8-4f51-902b-f883afc1e035
https://uk.reuters.com/article/us-funds-ajo-partners/value-fund-manager-ajo-with-10-billion-assets-to-shut-business-idUKKBN26Z39W

Prism

Deleted_User said:

Prism said:

Deleted_User said:

Just checked Fundsmith equity class 1 acc. Only been around for 5 years (!). Outperformed the benchmark for the first 3. Underperformed for the last 2.  Global Large cap as a category did have great 10 years. Long term it has underperformed small.  And one big reason last 5 years look so good is you measuring in GBP and GBP losing 20%.

I'm not sure which stats you have seen but Fundsmith has been around for 10 years and outperformed MCSI World every year except for 2016 when it equalled it. Trustnet is giving a total return of 436.9% over those 10 years. Global Index funds have done around 152% over that time. The GBP drop has certainly helped returns but 10% isn't really here nor there over the last 5 years - its around 20% over 10 years.

Question marks over if MCSI World is a fair benchmark since Fundsmith only really invests in three sectors but I can't think of a better one, partly since those three sectors are not fixed weights. Impossible to know if that performance continues but I have a large chunk of my money betting on it

I looked on Morningstar. Fundsmith underperformed the benchmark last year and is underperforming by quite a bit in 2020.  I made a mistake; it does have 10 years. Also, msci world isn’t the right benchmark. Should be large cap growth. 

https://www.morningstar.co.uk/uk/funds/snapshot/snapshot.aspx?id=F00000LK2Q&tab=1

I guess that is the problem with comparing funds vs benchmarks when they don't follow an index. It comes down to the person or website who review the fund to choose a benchmark, especially when the fund doesn't follow one. MSCI global large cap growth might work but the fund doesn't look much like that in its composition. Also not helped by the fact that you can't actually follow that index, at least in the UK.

BritishInvestor

Prism said:

Deleted_User said:

Prism said:

Deleted_User said:

Just checked Fundsmith equity class 1 acc. Only been around for 5 years (!). Outperformed the benchmark for the first 3. Underperformed for the last 2.  Global Large cap as a category did have great 10 years. Long term it has underperformed small.  And one big reason last 5 years look so good is you measuring in GBP and GBP losing 20%.

I'm not sure which stats you have seen but Fundsmith has been around for 10 years and outperformed MCSI World every year except for 2016 when it equalled it. Trustnet is giving a total return of 436.9% over those 10 years. Global Index funds have done around 152% over that time. The GBP drop has certainly helped returns but 10% isn't really here nor there over the last 5 years - its around 20% over 10 years.

Question marks over if MCSI World is a fair benchmark since Fundsmith only really invests in three sectors but I can't think of a better one, partly since those three sectors are not fixed weights. Impossible to know if that performance continues but I have a large chunk of my money betting on it

I looked on Morningstar. Fundsmith underperformed the benchmark last year and is underperforming by quite a bit in 2020.  I made a mistake; it does have 10 years. Also, msci world isn’t the right benchmark. Should be large cap growth. 

https://www.morningstar.co.uk/uk/funds/snapshot/snapshot.aspx?id=F00000LK2Q&tab=1

I guess that is the problem with comparing funds vs benchmarks when they don't follow an index. It comes down to the person or website who review the fund to choose a benchmark, especially when the fund doesn't follow one. MSCI global large cap growth might work but the fund doesn't look much like that in its composition. Also not helped by the fact that you can't actually follow that index, at least in the UK.

I think that's a reasonable conclusion - also when the fund is so concentrated you'd need to make an allowance for this risk when comparing to something more diversified. 

[Deleted User]

BritishInvestor said:

Deleted_User said:

Linton said:

BritishInvestor said:

Linton said:

Prism said:

Deleted_User said:

Just checked Fundsmith equity class 1 acc. Only been around for 5 years (!). Outperformed the benchmark for the first 3. Underperformed for the last 2.  Global Large cap as a category did have great 10 years. Long term it has underperformed small.  And one big reason last 5 years look so good is you measuring in GBP and GBP losing 20%.

I'm not sure which stats you have seen but Fundsmith has been around for 10 years and outperformed MCSI World every year except for 2016 when it equalled it. Trustnet is giving a total return of 436.9% over those 10 years. Global Index funds have done around 152% over that time. The GBP drop has certainly helped returns but 10% isn't really here nor there over the last 5 years - its around 20% over 10 years.

Question marks over if MCSI World is a fair benchmark since Fundsmith only really invests in three sectors but I can't think of a better one, partly since those three sectors are not fixed weights. Impossible to know if that performance continues but I have a large chunk of my money betting on it

According to Morningstar Fundsmith uinderpeformed the "MSCI ACWI Large Cap Growth Index " in 2019 and in 2020 to date.  Prior to then it wildly out-performed it. 

10 year perfomance
Fundsmith 18.3% annually=437% cumulative
Index: 13.87% annually=267% cumulative

But the question is only of academic interest anyway as it seems that according to MSCI there are no ETFs that track the index.

See: https://www.morningstar.co.uk/uk/funds/snapshot/snapshot.aspx?id=F00000LK2Q&tab=1

Might be better to use World rather than ACWI

Perhaps but Morningstar give ACWI Growth as the category/ Index against which they compare the fund.

In any case it does not make a lot of difference to the overall picture.

True. Its usual for certain funds / subsections of the market to outperform for 10 years on end. Does not say a thing about the next 10 years.  If anything, its “a bad omen“. 

"If anything, its “a bad omen“. "
Either it genuinely is different this time (always possible), or we are in the greatest "growth" bubble on record.
https://www.ft.com/content/fc7ce313-92f8-4f51-902b-f883afc1e035
https://uk.reuters.com/article/us-funds-ajo-partners/value-fund-manager-ajo-with-10-billion-assets-to-shut-business-idUKKBN26Z39W

“Value” and “small” have been hammered for 10 years. We do have a very large premium on growth by historic standards. Covid contributed to this run but there could be other longer term factors. Interestingly, “Small value US” has jumped by 8% this morning. 5% more than S&P 500.

I think benchmarking is important for all active portfolios. And it needs to be an appropriate benchmark with similar risks. Benchmarking is kinda pointless if you are passive and following an index.