Lindsell Train Global: what the hell is going on here?

iglad wrote: »

I'm a bit puzzled as what is going on at LTG as despite the S&P hitting record heights and the positive gains on the FTSE of late the LTG price seems to keep falling. It seems to do the very opposite of what one expects.
All very strange is there something I'm missing?

The first thing to consider if something is doing there opposite of what you expect is, how are you setting your expectation.

For example:

The change in value of the fund is a function of the value of the assets it holds in the proportion it holds them. Have you tried looking at the individual companies it holds, in the proportions it holds them, seeing what has happened to their values (in pounds sterling equivalent, if they are quoted in dollars or yen or euro)?

If not, why don't you do that? it should stop your puzzlement.

Say you are looking at it from early August, three months ago:

1) pound sterling has appreciated over the last three months, meaning investments in dollars or euros or yen are worth fewer pounds Back in early August a dollar investment in a US company was worth a little over 82p. Today a dollar is only worth 78p. So a dollar of S&P value is worth 5% less in pounds today than it was last quarter. Even if the S&P went up a bit, an investment fund holding S&P assets while publishing it's value in sterling could fall.

You mention the S&P hitting record heights:

2) The LT fund doesn't aim to track the S&P. One of the companies in the S&P500 is Apple (currently making up over 4% of the entire S&P500 on its own). Apple has gone up from $193 in early August to $260 a little over three months later. That 35% gain in a 3-4% constituent will add a whole percent to the S&P index's value. That's a large chunk of S&Ps growth just from the one company But LT doesn't hold it, so won't get that percent growth that the S&P does when Apple grows in value

You mention FTSE rising recently, but that's just the last month: over three and a half months, FTSE100 is down.

3) LT Global's biggest holding is Unilever, which is 0% of the S&P and under 3% of FTSE100, but over 8% of the LT fund. In the last nine weeks it fell in value by about 12-13% (though there was a small dividend in the period). Some of that value drop was the exchange rate issue already mentioned (as the company has a lot of overseas assets and income) while other bits of it was company-specific factors. But if 8% of your portfolio drops by 12% you lose a percent of your entire portfolio value before you even look at anything else in the portfolio. Pearson is down 30% this year. London Stock Exchange is up, but after getting multiple offers for its business over the last year, it's settling back a bit, down 5% in the last month.

Enlighten me someone.

Go on enlighten me, please.

The answers are out there if you look for them. If you can be bothered, you could go to page 26 on LT Global's June financial statements and see its entire list of holdings at that time and then research what happened to each of them since.

You can read up on the various other macro factors which have caused the S&P, FTSE UK and other world indexes to behave the way they have in recent months, note that LT Global doesn't try to mirror them, and compare that to the performance of the individual holdings that the fund does hold. Generally LT briefly discusses only one or two of its holdings or one or two macro issues in its monthly manager reports. In the September report for example, they discuss Pearson, a holding of theirs which fell substantially in value and the September report was far from the first time they mentioned it, though it lost 15-20% that month.

If you are going to be an active investor you should do your own research. If you're not going to look into what they are holding versus what an index holds, or reading the reports they publish - which would largely explain the performance difference from "what one expects" - there's probably not much point my attempting to do all the research for you.

In other threads it's appeared that you like to hold fashionable well-performing funds but drop things that in the short term are falling or in your opinion are going nowhere. Maybe it would be worth your while looking into the holdings and strategies more closely because there is a clearly a difference between what you expect and how it has performed, while there may not be much of an expectation difference at all for people who take a greater interest.