We’d like to remind Forumites to please avoid political debate on the Forum.
This is to keep it a safe and useful space for MoneySaving discussions. Threads that are – or become – political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
Smithson Investment Trust
Comments
-
they seemed to have hit a brick wall after many years of stellar performance.If a top performing fund falls far down the performance charts you can't just say sit it out as your profit declines you need to look into it.
I am looking at poor performance plain and simple, it may get better, then again it may get worse. It's one which I will monitor a lot more closely than my other funds.
You can't expect a fund to never have a year where it gives a performance below its most relevant index or benchmark, and so when it inevitably does have such a year, it does not mean it should automatically be the end of the road.
Funds will take their turns at being in different parts of the league table and if your strategy is to only buy the one that's at the top and sell it when it is no longer at the top, you will literally guarantee that you get a worse relative performance than if you had bought whatever it was from the middle of the pack that did well and took over the top spot. You are setting yourself up for disappointment because you can only ever win if you can predict the future.
That said, this whole 'hit a brick wall' and 'poor performance' is pretty much a nonsense, as Linton said in the first reply.
You said:It hasn't even beaten the the sector benchmark I am of the feeling it's lost it's way and it could take a while to get back on track. I may as well put the money into one of the trackers which are beating it.What I find very strange is how badly the BG American has gone off the boil form top dog to an also ran
If you read the most recent Annual Report (year to 30 April, published during May), they say:
According to Trustnet, over 3 years to this week it more than doubled your money, with profits almost twice as high as the index (103% while HSBC American Index only did 53%). Over 10 years the fund did over 530% while the same index fund did under 375%. Over 15 years, 650+ instead of 400%. But your contention is that since those glory days, it has gone off the boil.For the year to 30 April 2019 the return on B Accumulation Shares was 24.9% compared to the return on the S&P 500 Composite Index of 19.2%, in sterling terms. We believe that shorter-term performance measurements are of limited relevance in assessing investment ability and would suggest that five years is a more sensible timeframe over which to judge performance. Over the five years to 30 April 2019 the return on B Accumulation Shares was 185.5% compared to the return on the Index of 117.7%
However, if you look at the most recently-available results for shorter time periods, you'll see that over the last month the fund did 6% vs the index of about 5%; over last 3 months the fund did over 10% vs the index of about 7%; over last 6 months the fund did 26% vs the index of 21%.
So, over the long term its performance has been excellent, and in recent months (1, 3, 6 months) it significantly beat the index too, and if you look at the last April to April per their annual report it beat the index by 5%, so there seems to be nothing wrong with it. But the data you chose to cherry-pick was 1 year July to July when it lagged the index by 3%. All that tells you is that the fund and the index are both somewhat volatile and over some short term periods the fund will do better than the index and others worse. You can't get a fund that will beat the index over every possible start date to end date.
Well, (a) they *are* performing well because over the last month, 3 months, 6 months, 2 years, 3 years, 5 years, 10 years, 15 years, the BG American investor did substantially better than the US index or the sector average. A focus on growth companies has served the fund well.iglad wrote:I too was shocked to see all that mid and small cap in it's portfolio despite it only having 41 stocks!! I'd love to know who that are as they don't seem to be performing that well.
You can see the most recent full portfolio listing (which is about 3 months ago) in the Annual Report. Page 21/22 of the report (pg 23-24 of the pdf file):
https://www.bailliegifford.com/en/uk/individual-investors/literature-library/funds/oeics/icvc-long-form-annual-interim-reports/baillie-gifford-overseas-growth-funds-icvc-annual-report-april-2019/
It is not marketed as a large cap fund, the Morningstar analysis doesn't show them to be a large cap fund, their promotional material and fact sheet does not say they are a large cap fund. They aim to identify 'exceptional growth businesses' and hold a 'concentrated portfolio' with a 'long term horizon'. To me, that doesn't imply they are a large cap fund or will be investing into only the biggest companies.iglad wrote:Also from what I've read it's large Cap fundiglad wrote:and I can't see anything regarding small and mid-cap at all, what am I missing here?
If you look at the top 10 holdings on the latest (June) factsheet, you can see that 3 of them are Market Axess, Wayfair and Trade Desk, which are all companies valued at $12-13bn of which you've probably never even heard ; rather than the $850-950bn companies such as Amazon and Alphabet which also appear in the list. If you look in the annual report, you'll see things like Yext and Redfin which are valued in the $1-2bn range.
So, it doesn't seem like you have looked very hard at what the fund does or how it does it. If your research is limited to seeing a few names you recognise in the top ten holdings list and thinking, "oh yeah, amazon and google and facebook, I've heard of them, it must be a largecap fund" then yes you are missing something.
Whether you should drop the fund to buy Smithson depends principally on whether you want to have an investment that invests globally in small and mid sized companies, or one that invests for growth in companies in the USA with good results. One has 50% US exposure and the other has 100% US exposure, one has a 17-year track record and the other has less than a year of operations.
You say the reason you are thinking of quitting the fund that has done well for its 17-year existence is that it has 'gone off the boil'. Well, Smithson has only got a 9-month track record. Over the first few months from 1 October to Christmas Eve, it had grown no more than 2% while BG American lost 17%. Most US-focussed investments were going down so Smithson's modest return was a good relative performance. But then from 24 December to 27 July, BG American delivered over 40% while Smithson gave less than 25%. Overall, Smithson is ahead over the 9 months, but its outperformance at the start didn't mean it was the best place to be invested for the last 6 months. It wouldn't be ahead of BG American in that period. So, you should drop Smithson because it has 'gone off the boil', right?
No, that would be silly. The reason it didn't top the table for the last 6 months is that some other fund which was recovering from a bout of poor relative performance, staged a comeback. It doesn't mean Smithson was a bad place to be invested, correct?
You can apply exactly the same logic to your BG investment. It outperformed over many time periods and just so happened that some other fund (the index) happened to do better than BG for the most recent one year period, but it doesn't mean BG was a bad place to be, because BG added almost 11% to your wealth over the last year, a perfectly acceptable result. In the longer term it turned every £1 from 2004 into over £7.50 today while a US index fund only turned the pound into a fiver.
Comparing funds over short cherry-picked timescales is silly, especially in volatile markets with concentrated portfolios like BG American or Smithson which are deliberately trying to produce a result that's something other than the result of the index. You will get huge variance depending what date you start and end. A league table position or gain/loss of position over those periods is not really a good indicator of whether some investing style has gone 'off the boil'. It is true however that investee companies with certain characteristics will go in and out of popularity and if 'US growth' was better than 'global value/growth' in one period it may not necessarily be better over the next.0 -
I agree with nearly all of that except that SSON invests in small and mid caps. The average market cap of the companies in which it invests is 7.8bn. Nearly half of FTSE 100 companies are smaller.0
-
that's a very good way of putting it but he went rogue quite some time ago as his fund performance told me with people sat on 30-40% losses!! nest eggs have been halved for some. Wood ford is a perfect example of why I no longer adhere to the hold and ride it out philosophy anymore.0
-
I would say Smithson is more like a mid cap global fund with a sprinkle of small and large caps. I combine it with a couple of regional small cap funds to cover my smaller company exposure
The FTSE 100 really should be the FTSE 50 to be honest0 -
that's a very good way of putting it but he went rogue quite some time ago as his fund performance told me with people sat on 30-40% losses!! nest eggs have been halved for some. Wood ford is a perfect example of why I no longer adhere to the hold and ride it out philosophy anymore.
I bought his fund in my Mum's ISA and after few years of poor performance i decided to sell it all locking in a grand loss. Decided to invest the proceeds in smithson (IPO) and another stock and have more then made up for the loss.0 -
The Woodford debacle is centred around his WEIF fund where he went 'off piste' or 'rogue' or whatever you call it. Though the fund is gated, the units are valued at about 96p, so nobody has lost half their nest egg in his fund because nobody paid 192p ; the fund price only briefly touched 140p, once. So the maximum peak to trough loss is about 32% and you would only be sitting on >30% losses if you bought every one of your shares when they were over 137p in a small window of time between mid May and late July 2017.that's a very good way of putting it but he went rogue quite some time ago as his fund performance told me with people sat on 30-40% losses!! nest eggs have been halved for some.
He runs an investment trust too, where it would be possible to have lost half your nest egg if you had bought in at a large premium to reported NAV at the top of its value and then decided to sell out at 25+% discount to NAV later ; but given the name is 'Patient Capital' with a long recommended hold period of much longer than the two years since peak value, you would probably need to shoulder some of the blame yourself if you did that.
Your problem is that if you change to a philosophy where you buy something that you have just seen go up strongly and sell out when it is going down, that's the exact opposite of the very successful strategy of selling out of things that have gone up (sell high) and reallocating capital to things that have gone down (buy low).Wood ford is a perfect example of why I no longer adhere to the hold and ride it out philosophy anymore.
You will be reliant on your fund picks to carry their momentum and keep their place at the top of the leaderboards, which is pretty futile, as things will always tire out at some point when markets become unfavourable to their strategy, some quite spectacularly so.0 -
A perfect example of cutting your losses and investing the remainder elsewhere to do far better in a shorter period of time. well done.0
-
using the buy cheap, sell high philosophy, I wonder how many have bought into woodfords Investment trust which is running at quite a discount, shares look very cheap indeed.0
-
-
Yes, unusually smaller companies in the UK, Europe and Japan have had a poor year. I hold HSL, BRSC, TRG and BGS and they have all been poor performers this year. However, as you mentioned US seems OK, I hold JUSC and it has done quite well especially compared to my other smaller company holdings in other regions.
But as Linton said who knows why European Smaller Companies have suffered so much in th3 past year. We are all licking our wounds so to speak especially if you hold TRG.0
This discussion has been closed.
Confirm your email address to Create Threads and Reply
Categories
- All Categories
- 352.3K Banking & Borrowing
- 253.7K Reduce Debt & Boost Income
- 454.4K Spending & Discounts
- 245.4K Work, Benefits & Business
- 601.1K Mortgages, Homes & Bills
- 177.6K Life & Family
- 259.2K Travel & Transport
- 1.5M Hobbies & Leisure
- 16K Discuss & Feedback
- 37.7K Read-Only Boards