Fundsmith

NoviceInvestor1

aroominyork said:

NoviceInvestor1 said:

aroominyork said:

I really do not understated why people talk about Fundsmith/LT (or any other well managed fund) and Woodford in the same breath. The latter went seriously off piste, investing in companies and sectors which were unaligned with his expertise or his fund's stated aims. Even though Lindsell Train has had a bad run recently, I do not see an iota of Woodford-ishness in how LT is run - LT has stuck to its knitting but its approach has been out of favour.

I don't think that's the case at all.....LT's approach is quality, compounders. The iShares World Quality Index is up 41% in 3 years, Lindsell Train Global is up 12%. The quality factor has very marginally outperformed a straight global tracker over 3 years, LTGE has vastly underperformed the quality index. They've been the victim of very poor stock picking. 

The iShares ETF is loaded with technology. LT is loaded with consumer brands. The fact that they both like 'quality' does not make them comparable.

According to Morningstar Lindsell Train has a total of 27.9% in tech and communication services.

The ishares World Quality Index has 26.7%.....

coyrls

Aged said:

talexuser said:

Aged said:

I'll be honest here and admit that my best performing fund of all has been my UK equity income fund, therefore I'm not yet convinced about whether investing globally is the right way forward for me.

That's interesting. Which fund and over which timescale?

Artemis Income. 6 years.

What are your other funds?  A world tracker would have outperformed:

 

aroominyork said:

coyrls said:

Aged said:

talexuser said:

Aged said:

I'll be honest here and admit that my best performing fund of all has been my UK equity income fund, therefore I'm not yet convinced about whether investing globally is the right way forward for me.

That's interesting. Which fund and over which timescale?

Artemis Income. 6 years.

What are your other funds?  A world tracker would have outperformed:

 

I think you're looking at the wrong fund. The OP said it was a UK equity income fund so that will be Artemis Income (not Artemis Global Income). Artemis Income has returned just under 32% over five years, which is pretty good by UK standards but still underperformed a global index fund.

Sorry my mistake

Prism

NoviceInvestor1 said:

aroominyork said:

I really do not understated why people talk about Fundsmith/LT (or any other well managed fund) and Woodford in the same breath. The latter went seriously off piste, investing in companies and sectors which were unaligned with his expertise or his fund's stated aims. Even though Lindsell Train has had a bad run recently, I do not see an iota of Woodford-ishness in how LT is run - LT has stuck to its knitting but its approach has been out of favour.

I don't think that's the case at all.....LT's approach is quality, compounders. The iShares World Quality Index is up 41% in 3 years, Lindsell Train Global is up 12%. The quality factor has very marginally outperformed a straight global tracker over 3 years, LTGE has vastly underperformed the quality index. They've been the victim of very poor stock picking. 

That might have been the case if LT had picked those stocks 3 years ago but they didn't. They picked them nearly 10 years ago and have barely touched them since. You could make an argument that they could have sold them 3 years ago while at a highj but that would have gone against their investment strategy of buy and hold and no market timing.

Both LT and Fundsmith select companies for their characteristics and fundamentals - not for any view on their share price, either where it is today or where anyone thinks it will be in the future.

Prism

NoviceInvestor1 said:

aroominyork said:

NoviceInvestor1 said:

aroominyork said:

I really do not understated why people talk about Fundsmith/LT (or any other well managed fund) and Woodford in the same breath. The latter went seriously off piste, investing in companies and sectors which were unaligned with his expertise or his fund's stated aims. Even though Lindsell Train has had a bad run recently, I do not see an iota of Woodford-ishness in how LT is run - LT has stuck to its knitting but its approach has been out of favour.

I don't think that's the case at all.....LT's approach is quality, compounders. The iShares World Quality Index is up 41% in 3 years, Lindsell Train Global is up 12%. The quality factor has very marginally outperformed a straight global tracker over 3 years, LTGE has vastly underperformed the quality index. They've been the victim of very poor stock picking. 

The iShares ETF is loaded with technology. LT is loaded with consumer brands. The fact that they both like 'quality' does not make them comparable.

According to Morningstar Lindsell Train has a total of 27.9% in tech and communication services.

The ishares World Quality Index has 26.7%.....

Communication services is not technology. Some of the companies could be considered to cross both categories but not really  the ones that LTGE holds

NoviceInvestor1

The poster said LT's style has been out of favour. LT's style is quality (in the same way a growth funds style is growth and a value funds style is value). To see if something has been in favour it seems reasonable to compare to the style benchmark (MSCI World Quality, MSCI World Growth, MSCI World Value). Simply put LT's style has not been out of favour.

The stocks they have picked have been out of favour - there isn't really a debate to be had, their fund is up 12% in 3 years, the tracker that tracks Quality is up 41% and a vanilla global tracker is up 40%. However you look at it the stock selection has detracted from returns.

If holders are happy with that, and want to justify it in whatever way possible that's fine of course. 

Prism

aroominyork said:

It seems clear we are in a new economic environment and the growth-led market of the last decade+ is unlikely to continue. How are fans of Fundsmith (of which I count myself one) reacting?
 

I think the fund's focus on high margin profitable companies in tech, health and consumer defensive means there is no need to panic. But given the uncertainties ahead I might trim a bit (15% of my equity holdings are Fundsmith Sustainable) and move it into my core index fund (Fidelity Index World).

I mainly use two funds that fit into the large growth company category - Fundsmith and RL Sustainable Leaders. Due to the recent falls I have started added to them again.

aroominyork

NoviceInvestor1 said:

The poster said LT's style has been out of favour. LT's style is quality (in the same way a growth funds style is growth and a value funds style is value). To see if something has been in favour it seems reasonable to compare to the style benchmark (MSCI World Quality, MSCI World Growth, MSCI World Value). Simply put LT's style has not been out of favour.

The stocks they have picked have been out of favour - there isn't really a debate to be had, their fund is up 12% in 3 years, the tracker that tracks Quality is up 41% and a vanilla global tracker is up 40%. However you look at it the stock selection has detracted from returns.

If holders are happy with that, and want to justify it in whatever way possible that's fine of course. 

Investing styles fall into many more categories and sub-categories than Quality, Growth and Value. But there's little point pursuing this if you feel there is no debate to be had.

bostonerimus

In all this I see no discussion of how much risk you need to take on to meet your financial goals. Fundsmith and equities in general are inherently risky and if you could save a lot and were frugal maybe the small but guaranteed return of a savings account ladder would be enough. Now that’s probably an extreme example, but how many people have an idea of the returns they need to meet their financial goals given their level of capital investing/saving and are they taking more risk than is necessary? Or even taking enough risk. Investing is too often an “open loop” process.

aroominyork

It's a good point, boston, perhaps one that merits a thread of its own rather than being lost in one about Fundsmith.

talexuser

aroominyork

Was Woodford still cheered after he went off piste? 

Obviously not, so obvious it hardly needs saying. Doh!
But plenty of articles in the years he was at Invesco, let alone the first years he set up Woodford.