Fundsmith

[doug2500]

I see Fundsmith has broken the 500p mark, is this a new high? I don't remember it being £5 before.

It just doesn't seem right to be making ATH right now, the current market has me more uncertain than normal. Certainly interesting times we live in.

[fca2019]

I agree about the uncertainty, but with large holdings in Microsoft, Facebook and Paypal, these are companies that have done well in lockdown, and not necessarily correlated to the economic woes.

[Tigger]

It's been above £5 a few times since late May but a new high today of nearly 512p. It also got above £5 for one day on 20 Feb.

That's for the I units and Accumulation shares anyway.

[Lootman]

It's hard not to be aware of this fund and its success. You can't pick up an in-flight magazine without seeing glossy full-page ads extolling its virtues. But despite that I wasn't tempted for a few reasons:

1) I am not a big fan of open-ended funds, preferring ITs and ETFs, or individual shares.
2) It has a high management fee for an inactive portfolio
3) I individually own a number of its holdings anyway.

That said I was doing some trading around the end of the last tax year and when the dust settled I found myself with £30,000 left over (as you do) and so thought I would take the plunge. (After I had to figure out all those pesky share classes).

Looking at that holding today it is worth £34,000. Normally a 13% increase in value in just over a couple of months would be pleasing. Although in this case the market is up more than that, or at least the US market which is my benchmark.

So, early days, good but not great I guess would be the verdict so far.

[Dod101]

.

So, early days, good but not great I guess would be the verdict so far.

B***** h***! In a couple of months? Rather short a time to judge I would have thought.

Dod

[doug2500]

I don't particularly like OEIC's either but I've been in Fundsmith since the start and it has done me very, very well. Better than any of my stock picks and IT's.

One thing that puzzles me today though is that the price quoted by my broker in a portfolio valuation is not any of the prices quoted by Fundsmith. It seems to be a couple of pence less than the quoted price for my class. Why would this be?

[xeny]

One thing that puzzles me today though is that the price quoted by my broker in a portfolio valuation is not any of the prices quoted by Fundsmith. It seems to be a couple of pence less than the quoted price for my class. Why would this be?

My guess would be one price is the day before or the day after the other price. The fresh price definitely doesn't propogate instantly.

Have you tried looking at the historical pricing tool on the fact sheet page of the FS web site to see if that's the case?

[Dod101]

Very happy to see Fundsmith close a tad under 512p on Friday. New all time high. (Blue Whale Growth too, all time high).

I couldn't care two hoots about the fund structure. Caring about fund structure above what the fund actually does seems completely potty to me. (As does moaning about the charges when the return net of charges is stellar).

RVF.

Surprises me, these comments. Fund structure is important. See Woodford and also the very evident benefits from being a closed structure like an investment trust, although it has to be said that Terry Smith is a bit more open in his reporting than are many OEIC managers. I do not think that anyone was advocating caring about the fund structure above what the fund actually does and I agree that that would be silly.

His charges are outrageous though and over a few years they eat into the returns which could be so much more if they were similar to the charges on say Scottish Mortgage. Smith of course trades on exactly what you have just posted.

Dod

[doug2500]

One thing that puzzles me today though is that the price quoted by my broker in a portfolio valuation is not any of the prices quoted by Fundsmith. It seems to be a couple of pence less than the quoted price for my class. Why would this be?

My guess would be one price is the day before or the day after the other price. The fresh price definitely doesn't propogate instantly.

Have you tried looking at the historical pricing tool on the fact sheet page of the FS web site to see if that's the case?

You are right. I checked again today and the price has been updated to Fridays price. On Friday evening it was still showing Thursday's price.

Thanks

[xeny]

Fund structure is important. See Woodford and also the very evident benefits from being a closed structure like an investment trust,

for me OEIC vs IT has pros and cons - if you're dealing with fund constituents that aren't very liquid then an IT is obviously beneficial. However if that isn't an issue, I quite like the absence of buy/sell spread and premium discount that an OEIC offers.

With the FS Equity fund the company makes a point of discussing fund liquidity, presumably to assuage this concern.

[ADrunkenMarcus]

I think net returns are what is important but, equally, Dod's point about charges is a valid one. You basically have a headwind every year in that the manager needs to generate growth on an ongoing basis to at least offset the charges. Here's the total returns for Fundsmith and Scottish Mortgage:


("Price total return performance figures (Discrete Calendar Year Performance) are calculated on a bid price to bid price basis (mid to mid for OEICs) with net income (dividends) reinvested. Performance figures are shown in Sterling.")

I rate Fundsmith very highly indeed. (Smithson is 46% of my SIPP even though Terry Smith's role in that is less direct.)

However, going back five years at least, Scottish Mortgage has comfortably outperformed it. I don't know what the record is since Fundsmith's inception in November 2010?

Best wishes

Mark.

[Dod101]

It's no use moaning or complaining Dod101, just don't buy the fund eh? If you think Waitrose is too expensive go to Aldi. Exactly the same with Fundsmith. Nobody forces anyone to buy it. Personally, as long as Smith delivers, I coudln't care less how much he charges.

I charge as much as I can for my services. Im not in Smith's league. Nowhere near, but I'll charge as much as I my clients are willing to pay. They don't have to work with me. But they do.

RVF

I am not a holder of Fundsmith but I do hold Smithson. I am not moaning or complaining, simply commenting. It is though, very well known that high charges will eat into the returns, compounding as they go. I bought into Smithson because there is more excuse for high charges than for Fundsmith given the respective size of the funds.

Scottish Mortgage is a little over half the size of Fundsmith and yet its charges are about 1/3rd of them. I do not know how much of the SMT out performance comes from the much lower charges but I do know which has the better outcome and it is not Fundsmith. As I said the Fundsmith charges are outrageous.

Dod

[mc2fool]

However, going back five years at least, Scottish Mortgage has comfortably outperformed it. I don't know what the record is since Fundsmith's inception in November 2010?

SMT's outperformance over Fundsmith appears to be totally and solely in the last 3 months.

Go to https://www2.trustnet.com/Tools/Charting.aspx?typeCode=FLSX6,XO:GLBLGRTH, set Timescale to 10 years and, on the right, add Investment Trust / Global / Scottish Mortgage.... The two just jiggle around each other all the way up, until the March 2020 low, since which SMT has gone ballistic and almost doubled.

You can see the same over 5 years adding SMT to the HL chart: https://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/f/fundsmith-equity-class-i-accumulation/charts

Trustnet chart: SMT in blue, Fundsmith in red.

[MaraMan]

Whilst not disagreeing that Fundsmith charges are high I don't think a comparison with SMT is appropriate. It would be difficult to find to less similar investments. Maybe Lindsell Train IT would be better, both high conviction global investment vehicles. LT charges 0.85% and Fundsmith 1.05%, so not too dissimilar. 5 Year cummulative performance LT = 141% and FS = 146%.

MM

[ADrunkenMarcus]

However, going back five years at least, Scottish Mortgage has comfortably outperformed it. I don't know what the record is since Fundsmith's inception in November 2010?

SMT's outperformance over Fundsmith appears to be totally and solely in the last 3 months.

Go to https://www2.trustnet.com/Tools/Charting.aspx?typeCode=FLSX6,XO:GLBLGRTH, set Timescale to 10 years and, on the right, add Investment Trust / Global / Scottish Mortgage.... The two just jiggle around each other all the way up, until the March 2020 low, since which SMT has gone ballistic and almost doubled.

You can see the same over 5 years adding SMT to the HL chart: https://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/f/fundsmith-equity-class-i-accumulation/charts

This shows how useful it is to look at the data more broadly. You're right - Scottish Mortgage has basically taken off like a rocket. And, although the shares traded at a discount to estimated NAV in March, they're now only on a slight (1%) premium.

Best wishes

Mark.

[Dod101]

Whilst not disagreeing that Fundsmith charges are high I don't think a comparison with SMT is appropriate. It would be difficult to find to less similar investments. Maybe Lindsell Train IT would be better, both high conviction global investment vehicles. LT charges 0.85% and Fundsmith 1.05%, so not too dissimilar. 5 Year cummulative performance LT = 141% and FS = 146%.

MM

But the LT Investment Trust is only £216 million, Fundsmith is £20 billion. Another way to look at it is that almost the entire NAV of the LT Trust represents the annual charge of Fundsmith. Fundsmith's charges are outrageous however you look at them.

SMT is a high conviction global vehicle as well. Neither Fundsmith nor SMT trade much and SMT is about half the size of Fundsmith yet Fundsmith charges 1%, SMT's management charge is 0.3% giving an ongoing management charge of 0.37%

Dod

[MaraMan]

I take the point Dod but size is not a great comparator, other than for success. The influence of companies like Tesla & Amazon on SMT's 85 holdings is much more than say Microsoft or Facebook has on Fundsmith's 20 odd holdings. I would say the type and number of holdings Fundsmith has is not too dissimilar to that of Lindsell Train.

Despite Fundsmith's "outrageous" fees I, and it would seem a great many investors, are very happy with the investment gains we have had. I guess it's an example of elasticity of demand.

MM
PS - I think it's fair to say that SMT's fees are relatively low compared to other IT's of the same type

[scrumpyjack]

Well Terry charges what he can get away with and it must be expensive commuting from Mauritius!

[Dod101]

It has occurred to me that anyone could in fact replicate Fundsmith very easily if they had a mind to. If it only has 30 holdings, why not just take say £30,000 and buy each holding? You then have a clone of Fundsmith and you will over say a 5 year period, see the effect of the charges, because your own fund will have none.

MIght not be feasible because they will not be equally weighted but you could I assume replicate it if he does not trade much.

Dod

[simoan]

It has occurred to me that anyone could in fact replicate Fundsmith very easily if they had a mind to. If it only has 30 holdings, why not just take say £30,000 and buy each holding? You then have a clone of Fundsmith and you will over say a 5 year period, see the effect of the charges, because your own fund will have none.

MIght not be feasible because they will not be equally weighted but you could I assume replicate it if he does not trade much.

Dod

This is so wrong I can't believe an experienced investor like you has thought this is sensible. This approach would at the very best give you a very weak approximation and you would still incur broker account charges and dividend exchange rate charges. Most broker accounts probably wouldn't allow you to hold some of the stocks as they cannot access all the stockmarkets Fundsmith use (Finland, Switzerland, Spain, Denmark?). And most importantly of all you are really underestimating the stockpicking ability of Terry Smith and the fact that he has a constant amount of new cash to invest in his best ideas, whilst what you are proposing is a fixed pot that is 100% invested and so cannot benefit from pound cost averaging.

All the best, Si