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Fundsmith

General discussions about growth strategies which focus primarily on investing for capital growth
Aminatidi
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Re: Fundsmith

#427470

Postby Aminatidi » July 13th, 2021, 7:01 pm

scrumpyjack wrote:
Aminatidi wrote:Is there a situation where people think Fundsmith could go terribly wrong?

I don't mean lag behind the index a bit I mean literally go terribly badly wrong.


I would like to say Terry is too sensible to do a Woodford. However Woodford was OK as long as he was part of a big organisation and answerable to independent management and defined processes. He went off the rails when he effectively became a one man band doing whatever he liked and not having to go through processes and challenges by others as happens in large organisations.

I suspect Terry is very much his own master, so I don't think one could rule it out completely.


Well yes doing a Woodford is one scenario :)

I should have been clearer and meant assuming Fundsmith follows its strategy.

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Re: Fundsmith

#427475

Postby Backache » July 13th, 2021, 7:11 pm

Aminatidi wrote:Is there a situation where people think Fundsmith could go terribly wrong?

I don't mean lag behind the index a bit I mean literally go terribly badly wrong.

I think it depends on what you mean by terribly badly wrong.
Equities themselves are very highly valued by many counts at the moment, within equities the companies that Fundsmith holds are more highly valued than the market as a whole by measures such as p/e ratio, dividend yield or free cash flow yield. If there was both a major correction in stock markets particularly the S&P and a concomitant down valuation of growth stocks Fundsmith would undoubtedly suffer badly.
I am a long term holder of the fund (virtually since inception) and have no intention of selling, and would see the above scenario as a buying opportunity if I had the means at the time.

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Re: Fundsmith

#427476

Postby simoan » July 13th, 2021, 7:14 pm

ADrunkenMarcus wrote:
simoan wrote:What utterly ridiculous performance comparisons are being made on this thread! You cannot meaningfully compare the CAGR returns of your best performing individual shares to the performance of a fund, like Fundsmith.


That's the contrast being drawn. I have a few good ones which have beaten Fundsmith but I don't think anyone claimed their portfolio had beaten it overall.

Best wishes


Mark.

No, but some people had listed shares that have outperformed the Fundsmith T class in the past 12 months. What's the point of that? Without portfolio weighting being applied and a return for the whole portfolio given, it is meaningless and proof of nothing. Besides, the top performing share listed had only gained 44% which is not great tbh. I have about 20 shares that have beaten that, including several that are over 80%, a handful over 100% (BLV, SOM, BMS, REC, VLX), and my top perfomer is up 265% (SDI). But have I beaten Fundsmith T Class - no bloody chance! :)

All the best, Si

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Re: Fundsmith

#427478

Postby simoan » July 13th, 2021, 7:19 pm

ReallyVeryFoolish wrote:
Backache wrote:
Aminatidi wrote:Is there a situation where people think Fundsmith could go terribly wrong?

I don't mean lag behind the index a bit I mean literally go terribly badly wrong.

I think it depends on what you mean by terribly badly wrong.
Equities themselves are very highly valued by many counts at the moment, within equities the companies that Fundsmith holds are more highly valued than the market as a whole by measures such as p/e ratio, dividend yield or free cash flow yield. If there was both a major correction in stock markets particularly the S&P and a concomitant down valuation of growth stocks Fundsmith would undoubtedly suffer badly.
I am a long term holder of the fund (virtually since inception) and have no intention of selling, and would see the above scenario as a buying opportunity if I had the means at the time.

Funny thing though, in the 2020 market meltdown, FS maximum drawdown was actually less than most (all?) comparable funds. Which suggests what you say isn't really that likely in another meltdown situation?

RVF

It's really important to take this into consideration when comparing returns i.e. you really need to be compaing risk adjusted returns and taking volatility into account. I'm not sure there's any collective investment (certainly not that I know of) that beats Fundsmith on a risk adusted basis.

All the best, Si
Last edited by simoan on July 13th, 2021, 7:19 pm, edited 1 time in total.

Aminatidi
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Re: Fundsmith

#427480

Postby Aminatidi » July 13th, 2021, 7:19 pm

Backache wrote:
Aminatidi wrote:Is there a situation where people think Fundsmith could go terribly wrong?

I don't mean lag behind the index a bit I mean literally go terribly badly wrong.

I think it depends on what you mean by terribly badly wrong.
Equities themselves are very highly valued by many counts at the moment, within equities the companies that Fundsmith holds are more highly valued than the market as a whole by measures such as p/e ratio, dividend yield or free cash flow yield. If there was both a major correction in stock markets particularly the S&P and a concomitant down valuation of growth stocks Fundsmith would undoubtedly suffer badly.
I am a long term holder of the fund (virtually since inception) and have no intention of selling, and would see the above scenario as a buying opportunity if I had the means at the time.


That's the sort of thing I had in mind.

But then you think 10 years and all that (presumed) methodology around "quality" and I literally don't know what might make Fundsmith go bang without other equities also going bang?

I have 10% in it right now and anything by Terry Smith is very persuasive towards increasing that.

So it's the difference between a pairing of Fundsmith and something like Lindsell Train Global Equity perhaps lagging the index (as they did recently) v "something" causing them to perform wildly badly.

ADrunkenMarcus
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Re: Fundsmith

#427486

Postby ADrunkenMarcus » July 13th, 2021, 7:54 pm

simoan wrote:No, but some people had listed shares that have outperformed the Fundsmith T class in the past 12 months. What's the point of that?


Fair enough.

Aminatidi wrote:I have 10% in it right now and anything by Terry Smith is very persuasive towards increasing that.


Smithson is about 50% of my pension. While I am very happy with it, it's actually the worst performer in the portfolio as of today (last twelve months). It is a concentrated portfolio and, as such, many of its holdings are a significant proportion of my pension in their own right on a look-through basis.

Best wishes


Mark

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Re: Fundsmith

#427511

Postby Arborbridge » July 13th, 2021, 10:28 pm

ADrunkenMarcus wrote:Smithson is about 50% of my pension. While I am very happy with it, it's actually the worst performer in the portfolio as of today (last twelve months). It is a concentrated portfolio and, as such, many of its holdings are a significant proportion of my pension in their own right on a look-through basis.

Best wishes


Mark


it's actually the worst performer in the portfolio as of today (last twelve months).

Wow - it's increased 20% in the past twelve months and it's your worst! :?:

Boyo - come and run my portfolio :lol:

Arb.

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Re: Fundsmith

#427513

Postby tjh290633 » July 13th, 2021, 10:42 pm

monabri wrote:
Sorry Terry but shouldn't you include your "Oozlums" in the calculation if you are quoting a median figure?

Since you ask, these are the shares no longer held:

Sold Shares                               IRR     First Bought   Date Sold
O2 161.82% 19/11/01 20/12/01
Brit Insurance Holdings NV 129.25% 18/05/10 26/10/10
Mitchells and Butler plc 38.20% 17/04/03 10/10/06
Anglo American plc 38.04% 09/10/08 19/02/10
Intercontinental Hotels Group plc 35.51% 17/04/03 30/08/05
Energy Group 34.42% 24/02/97 05/06/98
Scottish & Newcastle plc 30.20% 10/10/06 23/11/07
Yule Catto plc 29.56% 04/04/08 28/09/10
Stagecoach Holdings plc 22.32% 21/07/99 05/03/08
Indivior plc 21.35% 23/12/14 25/06/18
Blue Circle Industries plc 20.74% 21/07/99 25/07/01
BG Group plc 15.80% 08/12/86 07/06/06
Prudential Corporation 12.45% 25/09/90 18/05/10
Hanson plc 11.75% 26/05/87 30/05/07
BOC Group plc 11.69% 26/05/87 07/06/06
Cadbury Schweppes plc 11.40% 26/05/87 04/04/08
Scottish Power plc 10.99% 18/06/98 08/02/07
Whitbread plc 10.77% 06/08/98 31/10/06
Imp.Chem.Ind.plc 10.64% 09/02/70 02/01/08
Pilkington plc 10.53% 18/01/80 07/03/06
Premier Farnell plc 10.48% 17/01/08 14/06/16
Rexam plc 10.41% 19/01/04 27/04/16
William Hill plc 9.15% 05/03/08 29/12/21
Marconi 7.67% 24/08/89 21/11/02
Tomkins plc 7.63% 31/10/06 01/10/10
Thus Group plc 7.46% 20/03/02 15/10/08
HBoS plc 4.69% 02/06/97 05/06/08
Six Continents plc, formerly Bass plc 3.86% 05/10/99 15/04/03
RSA Insurance Group plc 2.37% 21/07/99 05/03/14
Rentokil Initial plc 0.34% 07/06/06 19/02/10
ITV plc -0.51% 14/02/97 28/09/10
Northern Foods plc -2.36% 07/03/06 17/02/11
Allied Domecq plc -8.64% 21/07/99 27/07/00
Trinity Mirror plc -10.96% 23/11/07 22/10/09
British Airways plc -33.69% 21/07/99 17/01/03
DSG International plc -37.46% 24/02/06 06/05/09
Premier Foods plc -46.29% 14/12/06 19/02/10
Cattles plc -81.53% 05/06/08 16/03/11
Mapeley Ltd -88.99% 30/05/07 20/03/09
Syngenta AG -92.88% 13/11/00 23/11/00
Carillion plc -93.54% 27/04/16 25/06/18
Centrica plc -97.24% 17/02/97 06/03/97

Mean 3.27%
Median 10.45%

A lot of the holding periods are very short, a couple of weeks in the case of Centrica and O2, and any less than a year will not be correct.

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Re: Fundsmith

#427515

Postby absolutezero » July 13th, 2021, 10:53 pm

tjh290633 wrote:
monabri wrote:
Sorry Terry but shouldn't you include your "Oozlums" in the calculation if you are quoting a median figure?

Since you ask, these are the shares no longer held:

Sold Shares                               IRR     First Bought   Date Sold
O2 161.82% 19/11/01 20/12/01
Brit Insurance Holdings NV 129.25% 18/05/10 26/10/10
Mitchells and Butler plc 38.20% 17/04/03 10/10/06
Anglo American plc 38.04% 09/10/08 19/02/10
Intercontinental Hotels Group plc 35.51% 17/04/03 30/08/05
Energy Group 34.42% 24/02/97 05/06/98
Scottish & Newcastle plc 30.20% 10/10/06 23/11/07
Yule Catto plc 29.56% 04/04/08 28/09/10
Stagecoach Holdings plc 22.32% 21/07/99 05/03/08
Indivior plc 21.35% 23/12/14 25/06/18
Blue Circle Industries plc 20.74% 21/07/99 25/07/01
BG Group plc 15.80% 08/12/86 07/06/06
Prudential Corporation 12.45% 25/09/90 18/05/10
Hanson plc 11.75% 26/05/87 30/05/07
BOC Group plc 11.69% 26/05/87 07/06/06
Cadbury Schweppes plc 11.40% 26/05/87 04/04/08
Scottish Power plc 10.99% 18/06/98 08/02/07
Whitbread plc 10.77% 06/08/98 31/10/06
Imp.Chem.Ind.plc 10.64% 09/02/70 02/01/08
Pilkington plc 10.53% 18/01/80 07/03/06
Premier Farnell plc 10.48% 17/01/08 14/06/16
Rexam plc 10.41% 19/01/04 27/04/16
William Hill plc 9.15% 05/03/08 29/12/21
Marconi 7.67% 24/08/89 21/11/02
Tomkins plc 7.63% 31/10/06 01/10/10
Thus Group plc 7.46% 20/03/02 15/10/08
HBoS plc 4.69% 02/06/97 05/06/08
Six Continents plc, formerly Bass plc 3.86% 05/10/99 15/04/03
RSA Insurance Group plc 2.37% 21/07/99 05/03/14
Rentokil Initial plc 0.34% 07/06/06 19/02/10
ITV plc -0.51% 14/02/97 28/09/10
Northern Foods plc -2.36% 07/03/06 17/02/11
Allied Domecq plc -8.64% 21/07/99 27/07/00
Trinity Mirror plc -10.96% 23/11/07 22/10/09
British Airways plc -33.69% 21/07/99 17/01/03
DSG International plc -37.46% 24/02/06 06/05/09
Premier Foods plc -46.29% 14/12/06 19/02/10
Cattles plc -81.53% 05/06/08 16/03/11
Mapeley Ltd -88.99% 30/05/07 20/03/09
Syngenta AG -92.88% 13/11/00 23/11/00
Carillion plc -93.54% 27/04/16 25/06/18
Centrica plc -97.24% 17/02/97 06/03/97

Mean 3.27%
Median 10.45%

A lot of the holding periods are very short, a couple of weeks in the case of Centrica and O2, and any less than a year will not be correct.

One thing I love about this forum is Terry's meticulous record keeping.

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Re: Fundsmith

#427560

Postby ADrunkenMarcus » July 14th, 2021, 8:38 am

Arborbridge wrote:
ADrunkenMarcus wrote:Smithson is about 50% of my pension. While I am very happy with it, it's actually the worst performer in the portfolio as of today (last twelve months). It is a concentrated portfolio and, as such, many of its holdings are a significant proportion of my pension in their own right on a look-through basis. ...


it's actually the worst performer in the portfolio as of today (last twelve months).

Wow - it's increased 20% in the past twelve months and it's your worst! :?:


Only just - it beat DP Poland. My SIPP had a good year, though. Total return stats taken this morning from Morningstar X-ray.

Smithson (SSON) 21.09%
DP Poland (DPP) 21.53%
Spirax Sarco Engineering (SPX) 37.66%
Temple Bar (TMPL) 44.54%
Standard Life UK Smaller Cos (SLS) 46.86%
Kainos Group (KNOS) 98.68%
Evolution AB (EVO) 138.02% (purchased January 2021)

Best wishes


Mark.

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Re: Fundsmith

#427567

Postby Arborbridge » July 14th, 2021, 9:00 am

ADrunkenMarcus wrote:
Arborbridge wrote:
ADrunkenMarcus wrote:Smithson is about 50% of my pension. While I am very happy with it, it's actually the worst performer in the portfolio as of today (last twelve months). It is a concentrated portfolio and, as such, many of its holdings are a significant proportion of my pension in their own right on a look-through basis. ...


it's actually the worst performer in the portfolio as of today (last twelve months).

Wow - it's increased 20% in the past twelve months and it's your worst! :?:


Only just - it beat DP Poland. My SIPP had a good year, though. Total return stats taken this morning from Morningstar X-ray.

Smithson (SSON) 21.09%
DP Poland (DPP) 21.53%
Spirax Sarco Engineering (SPX) 37.66%
Temple Bar (TMPL) 44.54%
Standard Life UK Smaller Cos (SLS) 46.86%
Kainos Group (KNOS) 98.68%
Evolution AB (EVO) 138.02% (purchased January 2021)

Best wishes


Mark.


You don't have many holdings quoted, so not the number of opportunities I create for myself to make bad choice :lol:

Well done. But I'm sure the observant will have noticed that TMPL has had a good bounce back only because it had a lousy drop previously. The price is only around what it was three years ago, whereas Smithson has grown 1.7x in that period.

All smoke and mirrors 8-)

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Re: Fundsmith

#427570

Postby ADrunkenMarcus » July 14th, 2021, 9:20 am

ReallyVeryFoolish wrote:My observation would be that for at least some of those shares, the gains are all about quite recent timing. Whereas with FS, for nearly 11 years now it's been one for the bottom drawer that just keeps delivering with little in the way of drama. I can't pick stocks like you obviously can. FS fits the bill nicely for me.


Yes, the trick is sustaining a high return on an ongoing basis. I'd imagine even a dreadful company might return 12% in a year due to sentiment changes in the market, yet returning 12% pa for two decades would be a challenge. And even if you chose a good share then a bad one will often cancel out the benefit, in my experience.

Arborbridge wrote:You don't have many holdings quoted, so not the number of opportunities I create for myself to make bad choice :lol:

Well done. But I'm sure the observant will have noticed that TMPL has had a good bounce back only because it had a lousy drop previously. The price is only around what it was three years ago, whereas Smithson has grown 1.7x in that period.

All smoke and mirrors 8-)


Yes and TMPL's long term performance since December 2001 is dire. I have considered chopping it on several occasions.

SSON has returned over 82% since launch in October 2018 so that thrashes TMPL and DPP for the same period.

Best wishes


Mark.


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