Fundsmith

NoviceInvestor1

Aged said:

I need to boost the 'equities' part of my portfolio to get the balance to what I'd like it to be, and I've been thinking for a while about Fundsmith Equity. It seems a highly regarded and successful fund, although the OCF is perhaps a bit higher than I'd like it to be. Would now be a good time to take the plunge? Would appreciate hearing some constructive opinions. No sarky remarks please, I'm simply trying to learn here 

FS has been a closet tracker for a few years now. Albeit a very expensive one, and one that carries more risk - the sharp drawdown earlier this year a reminder that what has done well in a very specific and favourable macro environment (low inflation, low interest) may not do well in other environments. It's hard to see a fund full of stocks priced at 30+ x earnings as overly defensive, and similarly hard to see it as defensive when it's increasingly just a big bet on US big tech.

I'd just up your passive global equity allocation, or perhaps add a well diversified private equity allocation depending on your objectives, risk appetite, etc. 

Aged

NoviceInvestor1 said:

Aged said:

I need to boost the 'equities' part of my portfolio to get the balance to what I'd like it to be, and I've been thinking for a while about Fundsmith Equity. It seems a highly regarded and successful fund, although the OCF is perhaps a bit higher than I'd like it to be. Would now be a good time to take the plunge? Would appreciate hearing some constructive opinions. No sarky remarks please, I'm simply trying to learn here 

FS has been a closet tracker for a few years now. Albeit a very expensive one, and one that carries more risk - the sharp drawdown earlier this year a reminder that what has done well in a very specific and favourable macro environment (low inflation, low interest) may not do well in other environments. It's hard to see a fund full of stocks priced at 30+ x earnings as overly defensive, and similarly hard to see it as defensive when it's increasingly just a big bet on US big tech.

I'd just up your passive global equity allocation, or perhaps add a well diversified private equity allocation depending on your objectives, risk appetite, etc. 

Hi and thanks for your input. The background to my situation is that my portfolio was originally set up with 10 funds - two of these were equity income funds. This worked quite well initially, but one of the funds was the Woodford fund which obviously is no more. My aim is to plug that hole, and restore the balance of my portfolio to what I am happy with. I'm presently sitting at 36% in equities and I'd like to be at 50%. So, I need another equity fund to plug the hole that Woodford left. As my original post said, I've been looking at Fundsmith for a while as a suitable replacement, and I thought it would sit nicely alongside my existing managed equity income fund and my developed world ex-UK tracker. My worry is that I've missed the boat for a 'good' time to buy into this fund, and I can't help being overcautious after what happened with Woodford. I wondered what others' opinions were?

poppy10_2

Prism said:

Its my favourite fund, and largest holding. So far it has never disappointed and does pretty much what it says on the tin. Its actually quite defensive for a global equity fund and tends to fall less during a typical crash.

It's been pretty disappointing for the last year. Outperformed by LifeStrategy/VWRL

jamei305

Aged said:

Hi and thanks for your input. The background to my situation is that my portfolio was originally set up with 10 funds - two of these were equity income funds. This worked quite well initially, but one of the funds was the Woodford fund which obviously is no more. My aim is to plug that hole, and restore the balance of my portfolio to what I am happy with. I'm presently sitting at 36% in equities and I'd like to be at 50%. So, I need another equity fund to plug the hole that Woodford left. As my original post said, I've been looking at Fundsmith for a while as a suitable replacement, and I thought it would sit nicely alongside my existing managed equity income fund and my developed world ex-UK tracker. My worry is that I've missed the boat for a 'good' time to buy into this fund, and I can't help being overcautious after what happened with Woodford. I wondered what others' opinions were?

Why not just add more to the Developed World ex-UK tracker as Audaxer suggested on the previous page?

Aged

jamei305 said:

Aged said:

Hi and thanks for your input. The background to my situation is that my portfolio was originally set up with 10 funds - two of these were equity income funds. This worked quite well initially, but one of the funds was the Woodford fund which obviously is no more. My aim is to plug that hole, and restore the balance of my portfolio to what I am happy with. I'm presently sitting at 36% in equities and I'd like to be at 50%. So, I need another equity fund to plug the hole that Woodford left. As my original post said, I've been looking at Fundsmith for a while as a suitable replacement, and I thought it would sit nicely alongside my existing managed equity income fund and my developed world ex-UK tracker. My worry is that I've missed the boat for a 'good' time to buy into this fund, and I can't help being overcautious after what happened with Woodford. I wondered what others' opinions were?

Why not just add more to the Developed World ex-UK tracker as Audaxer suggested on the previous page?

Because I want to keep the value of each individual tranche of my portfolio equal, and below a certain level. 

NoviceInvestor1

Aged said:

NoviceInvestor1 said:

Aged said:

I need to boost the 'equities' part of my portfolio to get the balance to what I'd like it to be, and I've been thinking for a while about Fundsmith Equity. It seems a highly regarded and successful fund, although the OCF is perhaps a bit higher than I'd like it to be. Would now be a good time to take the plunge? Would appreciate hearing some constructive opinions. No sarky remarks please, I'm simply trying to learn here 

FS has been a closet tracker for a few years now. Albeit a very expensive one, and one that carries more risk - the sharp drawdown earlier this year a reminder that what has done well in a very specific and favourable macro environment (low inflation, low interest) may not do well in other environments. It's hard to see a fund full of stocks priced at 30+ x earnings as overly defensive, and similarly hard to see it as defensive when it's increasingly just a big bet on US big tech.

I'd just up your passive global equity allocation, or perhaps add a well diversified private equity allocation depending on your objectives, risk appetite, etc. 

Hi and thanks for your input. The background to my situation is that my portfolio was originally set up with 10 funds - two of these were equity income funds. This worked quite well initially, but one of the funds was the Woodford fund which obviously is no more. My aim is to plug that hole, and restore the balance of my portfolio to what I am happy with. I'm presently sitting at 36% in equities and I'd like to be at 50%. So, I need another equity fund to plug the hole that Woodford left. As my original post said, I've been looking at Fundsmith for a while as a suitable replacement, and I thought it would sit nicely alongside my existing managed equity income fund and my developed world ex-UK tracker. My worry is that I've missed the boat for a 'good' time to buy into this fund, and I can't help being overcautious after what happened with Woodford. I wondered what others' opinions were?

Even taking this into account, I'd still be inclined to just add more to your tracker. Picking an active fund adds significant risk - concentration, manager risk, factor bet (most funds are a factor bet), extra cost, more chance of 2nd guessing yourself and selling after a period of underperformance, etc etc. If it makes you feel you are spreading you risk more, just choose a different passive (for example add Ishares MSCI ACWI to your current developed world ex UK holding). 

If you are absolutely desperate to add an active fund and it 100% has to be active then I'd look at Mid Wynd, JGGI or GGRP. 

Prism

poppy10_2 said:

Prism said:

Its my favourite fund, and largest holding. So far it has never disappointed and does pretty much what it says on the tin. Its actually quite defensive for a global equity fund and tends to fall less during a typical crash.

It's been pretty disappointing for the last year. Outperformed by LifeStrategy/VWRL

Shrug, one year barely even registers. I am more interested in how its doing after at least 5+ years. Besides, looking at that chart it has outperformed the majority of the last year but slipped over the last few months. Not sure I can read anything from it.

NoviceInvestor1

Prism said:

poppy10_2 said:

Prism said:

Its my favourite fund, and largest holding. So far it has never disappointed and does pretty much what it says on the tin. Its actually quite defensive for a global equity fund and tends to fall less during a typical crash.

It's been pretty disappointing for the last year. Outperformed by LifeStrategy/VWRL

Shrug, one year barely even registers. I am more interested in how its doing after at least 5+ years. Besides, looking at that chart it has outperformed the majority of the last year but slipped over the last few months. Not sure I can read anything from it.

If compared to a suitable index (it's a quality fund, so iShares World Quality seems a suitable benchmark) it's into it's 3rd year of underperformance out of 4. It got lucky in 2020, like anything with an overweight US and tech. And has underperformed in 2019, 2021 and 2022 so far (by 5%, 1% and 6% respectively).

It was a good fund a decade ago, but not one I'd want to be paying 1% for such drastic underperformance from in the last 4 years. 

bostonerimus

Aged said:

jamei305 said:

Aged said:

Hi and thanks for your input. The background to my situation is that my portfolio was originally set up with 10 funds - two of these were equity income funds. This worked quite well initially, but one of the funds was the Woodford fund which obviously is no more. My aim is to plug that hole, and restore the balance of my portfolio to what I am happy with. I'm presently sitting at 36% in equities and I'd like to be at 50%. So, I need another equity fund to plug the hole that Woodford left. As my original post said, I've been looking at Fundsmith for a while as a suitable replacement, and I thought it would sit nicely alongside my existing managed equity income fund and my developed world ex-UK tracker. My worry is that I've missed the boat for a 'good' time to buy into this fund, and I can't help being overcautious after what happened with Woodford. I wondered what others' opinions were?

Why not just add more to the Developed World ex-UK tracker as Audaxer suggested on the previous page?

Because I want to keep the value of each individual tranche of my portfolio equal, and below a certain level. 

Why? There's no need for you to buy another fund. People seem to think that by owning a lot of funds they are reducing risk or capturing some gains that they might otherwise miss, that's usually not the case. Don't complicate matters, just buy some more developed world equity tracker...for all we know Fundsmith might be the next Woodford or at least LT.

aroominyork

You really should re-think the logic of equal tranches, and even if you cannot let go of it for active funds you should think about ditching it for passive funds. A core/passive + satellite/active approach is used by plenty of people on this forum but not by limiting the size of the core fund to that of each satellite.