Fundsmith

Thrugelmir

NoviceInvestor1 said:

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. 

Do you drive using your rear view mirror ? 

NoviceInvestor1

Thrugelmir said:

NoviceInvestor1 said:

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. 

Do you drive using your rear view mirror ? 

No, do you? 

Aged

aroominyork said:

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.

I genuinely don't understand what difference it makes? What I'm trying to do is just the same surely ie 5 x 10% tranches in equity funds, and the other 5 slices in bonds and others? Say I had a portfolio of £500k - I would feel very uncomfortable having £250k in one fund.

coyrls

Aged said:

aroominyork said:

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.

Say I had a portfolio of £500k - I would feel very uncomfortable having £250k in one fund.

Why would that be?

bostonerimus

Aged said:

aroominyork said:

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.

I genuinely don't understand what difference it makes? What I'm trying to do is just the same surely ie 5 x 10% tranches in equity funds, and the other 5 slices in bonds and others? Say I had a portfolio of £500k - I would feel very uncomfortable having £250k in one fund.

Why? I have the vast majority of my money in three funds and they all have well over £250k in them. There is no less inherent risk in dividing your money up between equity funds rather than keeping it in just one, as long as you avoid the Woodfords of this world which is why I use Vanguard index funds. If you are doing it as part of an asset allocation strategy then you have an argument. Also, am I the only one who hates the use of the word "tranche"...?

Aged

coyrls said:

Aged said:

aroominyork said:

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.

Say I had a portfolio of £500k - I would feel very uncomfortable having £250k in one fund.

Why would that be?

bostonerimus said:

Aged said:

aroominyork said:

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.

I genuinely don't understand what difference it makes? What I'm trying to do is just the same surely ie 5 x 10% tranches in equity funds, and the other 5 slices in bonds and others? Say I had a portfolio of £500k - I would feel very uncomfortable having £250k in one fund.

Why? I have the vast majority of my money in three funds and they all have well over £250k in them. There is no less inherent risk in dividing your money up between equity funds rather than keeping it in just one, as long as you avoid the Woodfords of this world which is why I use Vanguard index funds. If you are doing it as part of an asset allocation strategy then you have an argument. Also, am I the only one who hates the use of the word "tranche"...?

If you feel comfortable with that, that's fine. The idea just blows my mind. Dividing it into smaller chunks, or slices, or portions, or holdings, or whatever other word you prefer to use (although I think 'tranche' fits the bill perfectly, as it pertains particularly to money) suits my cautious nature.

bostonerimus

Aged said:

coyrls said:

Aged said:

aroominyork said:

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.

Say I had a portfolio of £500k - I would feel very uncomfortable having £250k in one fund.

Why would that be?

bostonerimus said:

Aged said:

aroominyork said:

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.

I genuinely don't understand what difference it makes? What I'm trying to do is just the same surely ie 5 x 10% tranches in equity funds, and the other 5 slices in bonds and others? Say I had a portfolio of £500k - I would feel very uncomfortable having £250k in one fund.

Why? I have the vast majority of my money in three funds and they all have well over £250k in them. There is no less inherent risk in dividing your money up between equity funds rather than keeping it in just one, as long as you avoid the Woodfords of this world which is why I use Vanguard index funds. If you are doing it as part of an asset allocation strategy then you have an argument. Also, am I the only one who hates the use of the word "tranche"...?

If you feel comfortable with that, that's fine. The idea just blows my mind. Dividing it into smaller chunks, or slices, or portions, or holdings, or whatever other word you prefer to use (although I think 'tranche' fits the bill perfectly, as it pertains particularly to money) suits my cautious nature.

But dividing it into smaller parts is not giving you any less risk given the same asset allocation, it just makes your life more complicated. Psychology is important in personal finance, but you aren't actually being more cautious by dividing your money up in that way.

My issue with words like "tranche" is a general desire to avoid jargon when there are simpler and more widely understood words. The finance industry likes to make things complicated and language is a great tool to make things seem more opaque. But that's just my prejudice and my cross to bear.

Thrugelmir

NoviceInvestor1 said:

Thrugelmir said:

NoviceInvestor1 said:

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. 

Do you drive using your rear view mirror ? 

No, do you? 

Always forward looking. Same with investing. Though it's like driving into a fog along a road full of potholes. Requires ones full attention.

 If historic chart data was all that was required to invest successfully there'd be no fund management industry at all. One needs to understand why as well. There's no shortage of well informed research that provides a more rounded picture. 
 

coyrls

Aged said:

coyrls said:

Aged said:

aroominyork said:

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.

Say I had a portfolio of £500k - I would feel very uncomfortable having £250k in one fund.

Why would that be?

bostonerimus said:

Aged said:

aroominyork said:

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.

I genuinely don't understand what difference it makes? What I'm trying to do is just the same surely ie 5 x 10% tranches in equity funds, and the other 5 slices in bonds and others? Say I had a portfolio of £500k - I would feel very uncomfortable having £250k in one fund.

Why? I have the vast majority of my money in three funds and they all have well over £250k in them. There is no less inherent risk in dividing your money up between equity funds rather than keeping it in just one, as long as you avoid the Woodfords of this world which is why I use Vanguard index funds. If you are doing it as part of an asset allocation strategy then you have an argument. Also, am I the only one who hates the use of the word "tranche"...?

If you feel comfortable with that, that's fine. The idea just blows my mind. Dividing it into smaller chunks, or slices, or portions, or holdings, or whatever other word you prefer to use (although I think 'tranche' fits the bill perfectly, as it pertains particularly to money) suits my cautious nature.

There is nothing intrinsically cautious in having multiple funds compared to a single fund; ten high risk funds would still be riskier than one low risk fund.

aroominyork

Aged said:

aroominyork said:

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.

I genuinely don't understand what difference it makes? What I'm trying to do is just the same surely ie 5 x 10% tranches in equity funds, and the other 5 slices in bonds and others? Say I had a portfolio of £500k - I would feel very uncomfortable having £250k in one fund.

If I had £500k I would also feel very uncomfortable having £250k in one active fund, but I would have no problem with all £500k in one global tracker. Can I ask where you see the risk?