Fundsmith - Terry Smith commentary.

[Dod101]

Thanks Fred. Terry Smith and Nick Train are not that far apart, although Nick Train seems not to have the arrogance of Smith. I do not find that a very attractive quality. Still who cares if he delivers? I do not hold Fundsmith. Nick Train, via Finsbury does it for me.

Dod

[doug2500]

Terry's letters might not be up to Buffets yet but they are still the best, and most educational communications I receive.

He may have an ego but he has at least put his money where his mouth is (as has Nick Train) and so far delivered very well for the people that joined him. It will be interesting to see how Fundsmith does in a downturn.

Fundsmith is my biggest, and one of my best returning, holdings (so far, at least) with about 18% of my portfolio. So Terry has earned my thanks wholeheartedly.

[flyer61]

If you can get over Terry's ego then what he says makes a lot of sense.

They are very thorough in their research. Better than I could ever do. So I am buying his holdings directly into my SIPP through HL. One day I will need those dividends to live off. The Companies he picks give me the best possible chance of a growing and sustainable dividend flow.

My next purchases will be Nestle, Kone, and either Reckitt B, Diageo or Unilever.

Hopefully when my kids get my SIPP they will marvel at it's durability through thick and thin.

[Quint]

I too am a big fan or Terry Smith and Nick Train. Lindsell Train Global Equity and Funsmith Equity are the largest holdings in my ISA and SIPP and they have both done very well for me.

Wife has Fundsmith as her biggest holding in her ISA and Finsbury is held in her SIPP. SIPP is purely IT's otherwise she would have both in her SIPP as well.

I actually like Terry Smiths arrogance, as long as he delivers the goods.

To me both of these funds while delivering good growth seem to have a defensive tilt to them which is why i am happy to have large holdings.

[GJHarney]

I like his holdings and investment style very much, his personality doesn't bother me, but I would not invest in Fundsmith for two reasons.

First his ongoing charges are way too high. Disgustingly high in my opinion. And while the 'hidden' charges should be a lot lower then some other funds due to the lack of dealing (with his buy and hold approach) it is a big barrier for me.

But my biggest concern would be that this is a fund and fund house totally tied to one person. Smith is 65 or thereabouts. Still young enough I guess, but not getting younger. But age aside I always think of the number 27 bus scenario. Were he to fall under it (or anything else) seriously what would happen to the fund in terms of price and value? When John McClure sadly passed away after a short illness a few years ago the Acorn Income fund he was lead manager on fell by around 25% despite it being collectively managed and took around two years to recover as McClure was so closely identified at the time with Acorn. Yes, it would be slightly different with a OEIC (although perhaps not for Smith's IT fund), but it could still have big consequences.

Maybe I'm overly cautious, but the thought of having 25% or so of my eggs in that type of one man band basket sends shivers!

[Itsallaguess]

over the last few years since lunching his fund.

Listen, if you think his charges are too high, then why not just come out and say it........



Itsallaguess

[flyer61]

The reason I decided to buy his pickings direct (besides I like his investing methodology) was to avoid yet another set of charges. If you are paying a platform fee then with his 1% it all adds up.

His portfolio strikes me as 'Defensive growth stocks' so it should suit everybody!

I had a look through the cupboards to see what we consume the most (the kitchen is a foreign land in my household) Heinz products featured...but he does not have Heinz in the portfolio. Pays a 3% dividend quarterly. The biggee is it is not growing, it is stuck in 2nd gear. Ergo return on capital being reinvested to achieve the snowball effect is just not happening. Another one I have been looking at is Kimberley-Clark, it's products are as defensive as they come! Bog paper and diapers Thought he would have them but again no growth.

Currency is hurting at the moment however I see this as an opportunity. I still believe long term sterling will be lower.

Others elsewhere on these forums might take note of his comments about Centrica and Anglo American. I have never owned AA but had Centrica for the dividend income in my ISA. The first surprise from left field and I sold at £2. Won't be going back near any of these CNA, SSE , Glaxo (there WILL be a dividend cut in 2019) etc

His Investment trust is one of only two holdings I have in the Near/Far East, hopefully with the same disciplined research he will be able to keep a robust growing portfolio. Going to have to given the fee!

Good luck to all.

[ADrunkenMarcus]

My next purchases will be Nestle, Kone, and either Reckitt B, Diageo or Unilever.

I hold the last four and I intend to hold them for a very long time to come. Kone is going through a bit of a slowdown in China but, qualitatively, it's a fine company with a strong balance sheet, recurring revenues, a decent dividend yield and an entrenched business model. The returns on capital are very good, around 40%. I'm planning to top up soon.

Best wishes

Mark.

[YeeWo]

My next purchases will be Nestle, Kone, and either Reckitt B, Diageo or Unilever.

I hold the last four and I intend to hold them for a very long time to come.

I hold the last three. The salient point, to me at least, is that Fundsmith managed TR of 22% in 2017 versus my own 12%. If I cannot come closer to Terry next year........if you can't beat 'em........

The only issue I envisage is my Pot is held within an HSBC InvestDirect+ ISA. How On Earth would I buy Fundsmith?

[Alaric]

The only issue I envisage is my Pot is held within an HSBC InvestDirect+ ISA. How On Earth would I buy Fundsmith?

You check whether the Fundsmith OEIC is available on the HSBC platform and what it would cost. If it isn't there or they would charge too much, you move the ISA elsewhere.

Having quickly looked at their charges
https://investments.hsbc.co.uk/pdf/inve ... es-kfd.pdf
they don't appear to allow OIECs under InvestDirect +.

[ADrunkenMarcus]

The salient point, to me at least, is that Fundsmith managed TR of 22% in 2017 versus my own 12%. If I cannot come closer to Terry next year........if you can't beat 'em........

Yes, we can hold many of Fundsmith's known holdings directly as individual shares, which certainly saves on the ongoing charges (if we ignore the 'payback' time for the dealing costs to wear off) but there's a lot more to it in terms of how Fundsmith's portfolio is weighted, when holdings are topped up, and so forth. Even if we have the same holdings the result might be different depending on when they were purchased. I don't worry too much about currency movements but I don't know if Fundsmith is hedged or not.

If Fundsmith is charging 1% but still doing better after accounting for that cost, then the return it provides net of all charges is what matters.

Best wishes

Mark.

[MaraMan]

Given Fundsmith's consistent performance I don't see why anyone would not hold it, even given the fees. As for TS's alleged arrogance, well he barely registers against the large number of really arrogant people I met in 40 year career in the City. Has opinions which he rightly shares, and they have proven pretty sound to date.

I have invested in this fund for at least 5 years and have increased it in that time. it now represents about 10% of my SIPP and at the moment I have zero plans to reduce that.

MM

PS - I also hold Nick Train picks through Finsbury.

[ADrunkenMarcus]

As for TS's alleged arrogance, well he barely registers against the large number of really arrogant people I met in 40 year career in the City. Has opinions which he rightly shares, and they have proven pretty sound to date.

I wonder - what examples are there of Terry Smith's 'arrogance'? Isn't it more probable - as you highlight - that he is simply voicing strong opinions? Being blunt, being sure of your thesis...that's not arrogant IMHO.

Best wishes

Mark.

[toofast2live]

In the dim and distant past wasn’t St. Terry involved a zero vehicle that did not perform. Or am I confusing him with someone else.

While on history who was that top rated European fund manager who had a breakdown and attended court in high heels?

[Alaric]

In the dim and distant past wasn’t St. Terry involved a zero vehicle that did not perform. Or am I confusing him with someone else.

Something to do with split investment trusts.
https://www.theguardian.com/money/2003/ ... bsandmoney
http://www.independent.co.uk/news/busin ... 43815.html

While on history who was that top rated European fund manager who had a breakdown and attended court in high heels?

Back in the dotcom era.
http://www.telegraph.co.uk/news/uknews/ ... harge.html

[flyer61]

Like FredBloggs I don't find Smith arrogant just 'right'! Valid points have been made about you are better off buying the fund and not worrying to much about his fee. The fund does change, witness the dumping of Smucker and Imperial Brands( both of which I hold).

One thing that Smith has made me very aware of is that the UK is just a small part of the investing world. I would venture to say that many FTSE 100 companies that are stalwarts of portfolios on these forums would go in his 'uninvestable' bucket.

At the end of the day the combined market cap of the shares in his fund runs to several trillion. Surely the growing income stream from this lot with a sensible bond/preference share portfolio should make for a comfortable and ultimately not to volatile pension in my dotage...

[Backache]

My next purchases will be Nestle, Kone, and either Reckitt B, Diageo or Unilever.

I hold the last four and I intend to hold them for a very long time to come.

I hold the last three. The salient point, to me at least, is that Fundsmith managed TR of 22% in 2017 versus my own 12%. If I cannot come closer to Terry next year........if you can't beat 'em........

The only issue I envisage is my Pot is held within an HSBC InvestDirect+ ISA. How On Earth would I buy Fundsmith?

If you want to buty Fundsmith in an ISA you can hold it directly with Fundsmith and there is no extra charge, just go to the website and apply(You can also move existing ISA's to Fundsmith , though exit charges may apply)

[Backache]

2019 Letter to Fundholders for those interested usually an interesting read whether you hold it /agree or disagree with him.

https://www.fundsmith.co.uk/docs/defaul ... f?sfvrsn=8

[nmdhqbc]

I'm on page 6 and it has made me think of this a few times...
https://www.youtube.com/watch?v=i_xVAqJ-NY0

[bluedonkey]

I'm on page 6 and it has made me think of this a few times...
https://www.youtube.com/watch?v=i_xVAqJ-NY0

I like James Acaster but I don't get the connection.