Anyone dumping Fundsmith?

NoviceInvestor1

I sold Fundsmith a couple of years back when it had morphed from quality to a pure growth fund, with a PE ratio far higher than the index and a massive overweight tech. 

My theory was it had gone from a defensive fund to a high risk bet and was at massive risk of a rerating downward (having benefitted from multiple expansion for many years). It was a good call, as it tanked the following year (2022) and those previous defensive qualities were nowhere to be seen. 

Volatility has recently been higher than the MSCI World, as has drawdown and yet returns have been lower. Not a good equation.  

That being said, having either sold or seen its holdings in tech sink, it’s back to a more reasonable premium to the index in terms of valuation, and less tech heavy. So suspect the outlook for it is better moving forward than it has been last couple of years.

 But it’s not one for me - active funds that are simply a bet on a single factor hold no appeal for me personally. 

itwasntme001

Still holding with no intention of selling.  Have held since 2016.  I don't agree with some of the posters about it being a single factor bet or that the high PEs is concerning.  I used to think this way and was thinking of just sticking to index trackers.  But I realised this was the wrong way to think about investing.  Factor bets are just a method of constructing explanations for market returns between stocks (i.e. backward looking).  High PEs do not make them expensive alone, indeed some may very well be cheap compared to the low PE counterparts.

ChesterDog

My reasons were the following.

1. I was a bit perturbed when TS instigated a long/short fund. Although irrelevant to his own customers and clients, it seemed so at odds with his investment convictions that it seemed a little off.

2. Some of the reported events surrounding the breakdown of his relationship and his subsequent divorce seemed to indicate less than exemplary judgement.

3. It seemed to me that, over the last few years, the equity fund was subject to more management/judgement decisions which muddied the previously clearer water of a strong focus on longstanding companies with high and consistent ROCE.

4. The question of TS's retirement began to enter the frame.

5. The charges and the way the company itself is structured don't sit comfortably with me and, perhaps, indicate some hubris. This often comes before a change of fortunes.

6. I admired the "We only have one fund, so it had better be good" original ethos.

7. Three - and then five - years of not beating a global index tracker feels like I've given it enough of a chance.

8. I took up an incentive to switch my accounts to HL, which meant (for cost reasons) ditching OEICs.

These are among my personal reasons (there were others that don't immediately come to mind) and others will disagree.

Ironically, I'm currently able to post more than I normally would because my wife is in hospital (I'm with her now) having suffered a heart attack on Thursday! She's absolutely fine, I'm pleased to say, and due home tomorrow.

ChesterDog

9. I'm at a point with investments where we definitely have "enough", although more is always good.

So I've been progressively switching more towards passive index trackers, which have always been a sizeable part of the portfolio.

FS was once was much as 20-25% of our holdings, but slowly reduced to about 10%.

As I've moved to HL and out of OEICs, its passive replacement is only 5%.

75% of our investment total is now VWRP.

ColdIron

Just idle curiosity on a lazy Sunday morning, VWRP rather than VHVG?

I have quite a bit of VWRP in one of my accounts but will soon start switching some funds in one of my ISAs to a tracker and am strongly considering developed world only. VWRP is more diverse for sure but I'm not 100% sold on the value of EM over a shortish period, I'm no spring chicken any more

ChesterDog

ColdIron said:

Just idle curiosity on a lazy Sunday morning, VWRP rather than VHVG?

I have quite a bit of VWRP in one of my accounts but will soon start switching some funds in one of my ISAs to a tracker and am strongly considering developed world only. VWRP is more diverse for sure but I'm not 100% sold on the value of EM over a shortish period, I'm no spring chicken any more

I've pondered those very points, along with switching to FWRG, and I was holding the HSBC global OEIC until recently.

I do value the extra diversification even though it may well not prove to be worth even the small additional cost.

I landed on VWRP and try to follow my own original investment mantra, which is that good enough is good enough - it will never be perfect and will perform much better by being largely left alone. That is, until there's a really clear case for change.

I have the feeling that, if I switch out of VWRP, Vanguard will immediately reduce the ongoing charge...

Prism

ColdIron said:

Just idle curiosity on a lazy Sunday morning, VWRP rather than VHVG?

I have quite a bit of VWRP in one of my accounts but will soon start switching some funds in one of my ISAs to a tracker and am strongly considering developed world only. VWRP is more diverse for sure but I'm not 100% sold on the value of EM over a shortish period, I'm no spring chicken any more

I am of the same mind.  I have used an allocation to emerging markets all the way through accumulation but as I get get closer to retirement I am intending on removing direct EM exposure and just getting it through developed markets. All the evidence I have seen suggests that EM exposure increases gains slightly over the long term, but I would prefer a slightly reduced more stable return.  Not quite ready to pull the plug on a China upturn just yet - but soon.

ColdIron

I've had a couple of direct EM funds in the past but am now convinced that the best place for them is tucked away in a global tracker. Out of sight out of mind, it reduces the temptation to meddle

Linton

Prism said:

ColdIron said:

Just idle curiosity on a lazy Sunday morning, VWRP rather than VHVG?

I have quite a bit of VWRP in one of my accounts but will soon start switching some funds in one of my ISAs to a tracker and am strongly considering developed world only. VWRP is more diverse for sure but I'm not 100% sold on the value of EM over a shortish period, I'm no spring chicken any more

I am of the same mind.  I have used an allocation to emerging markets all the way through accumulation but as I get get closer to retirement I am intending on removing direct EM exposure and just getting it through developed markets. All the evidence I have seen suggests that EM exposure increases gains slightly over the long term, but I would prefer a slightly reduced more stable return.  Not quite ready to pull the plug on a China upturn just yet - but soon.

I take a different view.  Since I dont use growth investments for short/medium term income I am not planning on using my growth investments for 10 years or more, small companies  and EM at around 20-25% (almost entirely SE Asia) seem fine to me.  Furthermore since a key requirement is to control specific risk I want to keep US within 40-45% of the total.  This leaves plenty of % space for other things.  

talexuser

I was around 10% in the ISA and 10% in the unwrapped, and 100% in the SIPP, because I can only put in £2880 a year of unearned income (already in an index linked final salary pension). The unwrapped CGT allowance is now used up feeding 20K into the ISA. and the SIPP has got to 70K and just changed to a world tracker I have elsewhere, so the ISA is the only one I can change meanwhile without paying tax. Both ISA and unwrapped around 60% growth and 30% capital preservation, so I think I will probably dump it in the ISA to split between world tracker and preservation in the same sort of proportions. Interesting views and as always time will tell.