Thoughts on Fundsmith

ChilliBob

Thrugelmir said:

No vested personal interest. Fundsmith has beaten the MSCI World Index every year since 2010 bar one. An impressive track record. At least you'd avoid having exposure to overpriced stocks such as Tesla and other meme stocks. That trackers are being forced to buy in the current "hot money" times.  

Yeah, that is a concern as it seems quite a concentration risk as people have mentioned on here before, and an uncertain environment for those stocks. I've been meaning to add some Quality and looked at the likes of MS Global Brands, BNY Global Long Term etc. I think the less than tracker returns were originally a detractor but then I realised that's not entirely the point in such funds.

The recent uptick in performance isn't the sole or main reason to purchase it, its just another (small) factor in the decision process.

I think it'd make it one of my safer investments tbh, as I'm either passive global trackers with the risks already discussed, BG Style growth, or some value stuff. So, this might be what I need to calm things down a bit! 

Aminatidi

I have about 10% each in Fundsmith and Lindsell Train Global Equity.

I've sort of gone full circle as they were two funds I started out investing in, got "bored" and seduced by the likes of SMT and USA, decided I really don't like those levels of volatility, so ran home to those two

If you watch the Fundsmith AGM's Terry is very compelling though I can get why he's a bit marmite.

My own take on it is that whatever they do on the upside they hopefully will not make me as poor as some of the alternatives might on the downside.

aroominyork

I hold Fundsmith (the Fundsmith Sustainable version) as about 16% of my equities. I like its approach, but is that because I understand and believe the approach or because the fund has delivered good returns and Terry Smith offers me a rationale which a non-expert like me is happy to accept?

My portfolio is skewed towards growth funds, but not too far. Growth funds are based on pricing in future earnings and the P/E ratios of these companies cannot keep rising. There are graphs which show that, historically, value has outperformed growth and, to me, it’s just a question of when and by how far the growth trajectory slows down or reverses.

I think many fans of Fundsmith (or Lindsell Train or Blue Whale, which take a similar approach), especially fans relatively new to investing, think that for much of the time Fundsmith will outperform the market, for some periods it will pretty much track the index, and there will only be brief periods of slight underperformance. The fact that over the last year Fundsmith slightly underperformed might give a false sense of security that underperformance can easily be ridden out.

In late May I posted “Over the last year, Lindsell Train Japanese (according to Trustnet) is 78th out of 78 funds, returning -7.9%, while the 77th placed fund returned +3.5% and the 76th returned +6.0%." Could the same thing happen to Fundsmith, and for an extended period of time? Who knows, and while I continue to hold Fundsmith I do not think it is a one way ticket to profits.

talexuser

I've had it in my ISA (10% of total) since August 2016, up 110%. Can only put £2880 into the SIPP every year so took a punt and went with it too (the SIPP is only a small part of the portfolio), up 68% because of the forced drip feeding over the same time frame. Went into Smithson for the unwrapped in August 2019 and that is up 43%. I'm in for the long term, one or two years underperformance has easily been paid for already. Did well in last years downturn, top satellite fund.

ChilliBob

Thanks for the comments guys, I've watched a few videos with Terry in and I do think he comes across well (I do get why others may not like him, but I do).

I think the downside perspective is important here, some of my 'naughty active' has moved a fair bit, but I knew that's what I was in for when backing stuff like SMT, EWI etc.

Thanks for the comments