Fundsmith Equity

SoftCentaur

I was thinking of putting a few groats into Fundsmith Equity but found there were three variants - namely "I"  "R"  and "T".  The returns shown are very slightly different for each variant, probably explained by the annual charge being 0.96%, 1.56% and 1.06% respectively.
My initial thought would be to go with fund "I" just because it has a lower cost ....  but there must be more to it.

Any enlightenment would be appreciated. 

maxsteam

If you don't understand, don't invest. This advice goes for any investment, not just this particular fund.

Alexland

Institutional, Retail and Terry class - same investments but different ongoing charges.

If you are accessing via a platform then you would want the cheaper Institutional class (as you will also be paying someone a platform fee) and if investing direct they offer the Terry class (as for 0.10% they provide the customer service and ISA wrapper if required). Terry claims to own the T class although with that valuation he could save a bit by moving to iWeb and getting the I class still he doesn't need tips from me and they might not accept offshore clients. You would never want to buy the expensive Retail class that's just there to make the others look cheaper.

It's a bit worrying that last year Terry started moving his own money into a new private hedge fund which might be shorting stocks and although they made a statement it's still not entirely clear why he is choosing to do this as I am sure he would be able to live comfortably from fundsmith dividends which is what he suggested others might do in a past agm.

i8change

SoftCentaur said:

I was thinking of putting a few groats into Fundsmith Equity but found there were three variants - namely "I"  "R"  and "T".  The returns shown are very slightly different for each variant, probably explained by the annual charge being 0.96%, 1.56% and 1.06% respectively.
My initial thought would be to go with fund "I" just because it has a lower cost ....  but there must be more to it.

Any enlightenment would be appreciated. 

T Class are for Direct Retail investors (see link below). You would save platform charges but pay slightly more (1.05 vs 0.95).

https://www.fundsmith.co.uk/

I Class are for Institutional investors but available to the public in small amounts (less than £5 million!) via Hargreaves Lansdown, AJ Bell and other investment platforms.

R Class are for advised *Non-UK* retail investors, so not appropriate otherwise.

Remember if you go direct with them (to save platform fees) you can only pay into *one* Stocks and shares ISA *in each tax year* (but you can open a new ISA with a different provider each year if you want to) so if you want other investments *that year* you would have to go for the I Class on the Stocks & Shares ISA investment platform of your choice.

Hope this helps. More info below:-

https://www.fundsmith.co.uk/documents

Johnnyboy11

Here's Terry's top 10 picks, accounting for about half of his fund. You sure you want that much exposure to these companies?

MICROSOFT CORP	7.93%
PAYPAL HLDGS INC	6.72%
FACEBOOK INC	4.64%
IDEXX LABORATORIES INC	4.49%
NOVO NORDISK A/S	4.48%
PHILIP MORRIS INTERNATIONAL INC	4.41%
MCCORMICK & CO INC	4.23%
INTUIT INC	4.13%
ESTEE LAUDER COMPANIES INC	3.99%
L'OREAL	3.74%

ChilliBob

L'Oréal, because you're worth it.

Love that he calls a share class 'Terry Class'! 

kinger101

Johnnyboy11 said:

Here's Terry's top 10 picks, accounting for about half of his fund. You sure you want that much exposure to these companies?

MICROSOFT CORP	7.93%
PAYPAL HLDGS INC	6.72%
FACEBOOK INC	4.64%
IDEXX LABORATORIES INC	4.49%
NOVO NORDISK A/S	4.48%
PHILIP MORRIS INTERNATIONAL INC	4.41%
MCCORMICK & CO INC	4.23%
INTUIT INC	4.13%
ESTEE LAUDER COMPANIES INC	3.99%
L'OREAL	3.74%

If you went with a global index fund, the top 10 companies would still account for around 1/5th of the value.

If you pick a managed fund, it's presumably because you want something a bit more concentrated.  Otherwise, you end up with an expensive pseudotracker.

valiant24

maxsteam said:

If you don't understand, don't invest. This advice goes for any investment, not just this particular fund.

Come On!   He/she just doesn't know what the various classes are, which is a pretty arcane piece of information (not many funds have a "Terry" class).  
That's completely different from not understanding the overall investment.

Aminatidi

SoftCentaur said:

I was thinking of putting a few groats into Fundsmith Equity but found there were three variants - namely "I"  "R"  and "T".  The returns shown are very slightly different for each variant, probably explained by the annual charge being 0.96%, 1.56% and 1.06% respectively.
My initial thought would be to go with fund "I" just because it has a lower cost ....  but there must be more to it.

Any enlightenment would be appreciated. 

Basically it's what you said.

If you're investing directly with Fundsmith you'll be purchasing the T class.

If you're using a platform (Hargreaves Lansdown, Interactive Investor or whoever) you'll almost certainly be purchasing the I class but you need to factor in platform fees.

valiant24

Alexland said:

It's a bit worrying that last year Terry started moving his own money into a new private hedge fund which might be shorting stocks and although they made a statement it's still not entirely clear why he is choosing to do this as I am sure he would be able to live comfortably from fundsmith dividends which is what he suggested others might do in a past agm.

I've been invested in Fundsmith since the start, and it has made me hundreds of thousands of pounds simply by investing my wife and my wife's ISA allowance for several years.  So I am a big fan.   But what I find more worrying is that "Terry" has recently moved to Mauritius or somewhere.   I don't see how he can as effectively run the business day-to-day from there, although he claims to do so.
Thus, per another post, I've been thinking of taking some profits for some while.

Alexland

I thought he had been in Mauritius for many years and it seems reasonable if he benefits from lower tax. I don't really see it as an obstacle to stock picking as Warren Buffet famously avoided Wall St. I am more interested in this new private hedge fund he seems to be running and wondering if it relates to the value style rotation we saw in the market last year.