Spot the dog

talexuser

BestInvest has just done the latest spot the dog lists - and include Fundsmith Equity with a 3 year return of 18% (also Lindsell UK Equity and Trojan with worse results).... Opinions on these cycles?

Bostonerimus1

Active funds that pick shares will show more volatility than benchmark indexes. You should only buy funds that you understand and think have good managers and a good investing philosophy and analytics. So why would a few years of poor performance make you want to change? If you sell now you will be selling into a dip which is a sure fire way to lose money, of course you don't know if these funds will recover or continue to slide, so what do you do? If you only bought because these funds were at the top of some league table and you sell because they are now at the bottom you have just bought high and sold low which is the most fundamental mistake.

Personally I avoid active funds as I can't work out how much of a fund manager's success is skill or just luck. So I buy index funds. Doing that I've averaged almost 9% return over 35 years and greatly simplified my fund choices and management decisions.

EthicsGradient

I find measuring total returns from points in the early phases of the pandemic (eg a 3 year one, probably Jan 21-Dec 23) not very useful - everyone started with what they had, and no one had been thinking "how do we survive a global emergency?", and the relative drops and speed of recoveries of sectors and countries was specific to a pandemic, and the governments they had at the time. Some managers may have been canny with spotting what would recover when, but the conditions will (hopefully) not occur again soon. And it may have been luck.

So I reckon at the moment, it's better to compare performance from Jan 20, or earlier, or wait until later (of course, that can then run into the invasion of Ukraine in early 22, but that's more the kind of global political/economic event that can be seen as possible every few years).

aroominyork

Dunno where they get 18% from. Charting Fundsmith on HL it has gained 29.8% over three years, while HSBC FTSE All World Index has returned 34.9%. Over one year and five years there is nothing between them, but Bestinvest got you to quote them so they are probably happy. 

ChesterDog

Fundsmith has just had a really good two or three weeks.

Maybe their data is pre that surge.

ChesterDog

Just checked on Trustnet. 

Even excluding that surge, it's only about 10% down over three years.

Prism

aroominyork said:

Dunno where they get 18% from. Charting Fundsmith on HL it has gained 29.8% over three years, while HSBC FTSE All World Index has returned 34.9%. Over one year and five years there is nothing between them, but Bestinvest got you to quote them so they are probably happy. 

It will be Dec 31st 2020 to Dec 31st 2023.

EthicsGradient

ChesterDog said:

Just checked on Trustnet. 

Even excluding that surge, it's only about 10% down over three years.

As Prism says, it's Dec 31st to Dec 31st. Trustnet does indeed show that as 18% for Fundsmith Equity, total return. 

If people don't want to sign up for the full report, you can see an article about it here: Bestinvest’s latest ‘Spot the Dog’ report reveals 170% more funds languishing in the doghouse - check out all the dog funds here - IFA Magazine

Fundsmith Equity underperformed its 'Global' category by 14%.

ChesterDog

Ah, I  misunderstood. 

I thought Aroominyork's comment was suggesting BI was reporting an 18% underperformance by FS over three years.

coastline

Fundsmith ain't bad that's for sure. Maybe slight underperformance in recent years but decent returns since launch.

Chart Tool | Trustnet

Value , which some investors highlighted ,Quality , Momentum and Fundsmith.

Chart Tool | Trustnet

IT's here where they are compared against FTSE and global index . Change the tabs if you want 10,20 and 30 year comparisons. Considering Fundsmith is in the global sector it's worth looking at the global IT's. There's not many outperform the global benchmark over time.

Returns From The Oldest Trusts - Revisited – IT Investor

talexuser

Interestingly, Fundsmith has said it is very strange that equally popular Lindsell Global or Scottish Mortgage is not in the Best dog list considering that they had much worse 3 year results, but just looking at funds and not trusts, and a fixed 3 year snapshot maybe shows the major limitation of these reports. They get them the publicity Best wants though!