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malc1111
Posted: 06 July 2021 12:02:47(UTC)
#359

Joined: 02/12/2017(UTC)
Posts: 376
1962;175955 wrote:
The way I deal with Fundsmith is that I limit my exposure to 10% of assets. It forces me to look for other sources of return and spreads risk. It also lessens the effect of their management fee.


I am same , have just over 10%, mind you way it has been going I wish I had some more at present.
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bédé
Posted: 06 July 2021 12:12:40(UTC)
#333

Joined: 26/09/2018(UTC)
Posts: 7,895
Frank Marquis;175967 wrote:
bédé;175929 wrote:
Whatever happened to reasoned debate?
Indeed it's notable that certain posters throw around plenty of accusations around Fundsmith yet never actually respond directly to refutations of those points.
OK. Point made. Please start some refutations. I can't be bothered to reread 4month's worth, so I won't complain about repetition.
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Bulldog Drummond
Posted: 06 July 2021 13:20:48(UTC)
#296

Joined: 03/10/2017(UTC)
Posts: 6,253
Frank Marquis;175967 wrote:
bédé;175929 wrote:


Whatever happened to reasoned debate?


Indeed it's notable that certain posters throw around plenty of accusations around Fundsmith yet never actually respond directly to refutations of those points.

Shall we consider some of the recent ones?
  • All the best ideas were more than 5 years ago
    The fund is too big
    Terry Smith doesn't do any work
    The fee is too high
    Nike is its biggest holding
    Nike is just a sneaker company
    Fundsmith underperforms x index


Any actual discussion of the fund (holdings / news / valuations) just gets drowned out by those who seem to love posting no matter how true or relevant their offerings are and want to troll the thread.


I think that the Nike point has been exploded, as someone pointed out that the top 10 holdings on HL were incorrect or out of date, and also that recent Nike results have reduced its P/E.

The largest question in my mind is the one I have mentioned but you haven't listed, which is that FS is boxed in to a very narrow universe of very expensive, quality, mega-caps. It was a smart move to spotted these 10 years ago and benefitted from their re-rating but has been more questionable in recent years and I think even more so looking forwards.

But feel free to post on more intellectually stimulating matters such as fund holdings, news and valuations.
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D Bergman
Posted: 06 July 2021 13:22:44(UTC)
#360

Joined: 22/03/2018(UTC)
Posts: 1,308

Thanks: 1684 times
Was thanked: 3536 time(s) in 1035 post(s)
malc1111;175976 wrote:
1962;175955 wrote:
The way I deal with Fundsmith is that I limit my exposure to 10% of assets. It forces me to look for other sources of return and spreads risk. It also lessens the effect of their management fee.


I am same , have just over 10%, mind you way it has been going I wish I had some more at present.


I don't understand the argument about lessening the effect of the fee.

If you just want to limit exposure to 10% of your portfolio, that's fine and perfectly acceptable.

But if you have to sell FS units in order to reduce your holding, that means that FS has increased in value more than the rest of your portfolio.

If that is the case, what do you care about a fee of, say, 1% as opposed to 0.5%? - you're still making more money by staying invested in FS rather than the other elements of your portfolio.
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3 users thanked D Bergman for this post.
Joe Soap on 06/07/2021(UTC), malc1111 on 06/07/2021(UTC), Harry Trout on 06/07/2021(UTC)
Dan L
Posted: 06 July 2021 13:45:46(UTC)
#297

Joined: 29/04/2018(UTC)
Posts: 804
Bulldog Drummond;175991 wrote:
Frank Marquis;175967 wrote:
bédé;175929 wrote:


Whatever happened to reasoned debate?


Indeed it's notable that certain posters throw around plenty of accusations around Fundsmith yet never actually respond directly to refutations of those points.

Shall we consider some of the recent ones?
  • All the best ideas were more than 5 years ago
    The fund is too big
    Terry Smith doesn't do any work
    The fee is too high
    Nike is its biggest holding
    Nike is just a sneaker company
    Fundsmith underperforms x index


Any actual discussion of the fund (holdings / news / valuations) just gets drowned out by those who seem to love posting no matter how true or relevant their offerings are and want to troll the thread.


I think that the Nike point has been exploded, as someone pointed out that the top 10 holdings on HL were incorrect or out of date, and also that recent Nike results have reduced its P/E.

The largest question in my mind is the one I have mentioned but you haven't listed, which is that FS is boxed in to a very narrow universe of very expensive, quality, mega-caps. It was a smart move to spotted these 10 years ago and benefitted from their re-rating but has been more questionable in recent years and I think even more so looking forwards.

But feel free to post on more intellectually stimulating matters such as fund holdings, news and valuations.


Fundsmith provide valuation stats based on FCF yield in each yearly report and compare to to the S&P. In 2015 Fundsmith was 4.3% and the S&P was 4.4% so about the same valuation. In 2020 Fundsmith was 2.8% and the S&P 3.7%. So over the last 5 years the S&P, on that basis has got slightly more highly valued but Fundsmith has got significantly more highly valued.
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malc1111
Posted: 06 July 2021 13:47:04(UTC)
#361

Joined: 02/12/2017(UTC)
Posts: 376
D Bergman;175992 wrote:
malc1111;175976 wrote:
1962;175955 wrote:
The way I deal with Fundsmith is that I limit my exposure to 10% of assets. It forces me to look for other sources of return and spreads risk. It also lessens the effect of their management fee.


I am same , have just over 10%, mind you way it has been going I wish I had some more at present.


I don't understand the argument about lessening the effect of the fee.

If you just want to limit exposure to 10% of your portfolio, that's fine and perfectly acceptable.

But if you have to sell FS units in order to reduce your holding, that means that FS has increased in value more than the rest of your portfolio.

If that is the case, what do you care about a fee of, say, 1% as opposed to 0.5%? - you're still making more money by staying invested in FS rather than the other elements of your portfolio.


I am not concerned about fee, that was previous poster. I just have mine at around 10% of pf, 10.6% at present but I don't sell if it rises. It is a core holding and will only sell in future if required as part of drawdown, or if it goes off the boil. As you say given the performance, fees are trivial.
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2 users thanked malc1111 for this post.
Joe Soap on 06/07/2021(UTC), D Bergman on 06/07/2021(UTC)
1962
Posted: 06 July 2021 13:55:24(UTC)
#362

Joined: 24/03/2018(UTC)
Posts: 31

Was thanked: 52 time(s) in 22 post(s)
Regarding fees, as Baillie Gifford recently said, fees are the only element of investment returns which can be guaranteed.
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1 user thanked 1962 for this post.
malc1111 on 06/07/2021(UTC)
Frank Marquis
Posted: 06 July 2021 14:09:13(UTC)
#298

Joined: 14/12/2012(UTC)
Posts: 104
Bulldog Drummond;175991 wrote:
Frank Marquis;175967 wrote:
bédé;175929 wrote:


Whatever happened to reasoned debate?


Indeed it's notable that certain posters throw around plenty of accusations around Fundsmith yet never actually respond directly to refutations of those points.

Shall we consider some of the recent ones?
  • All the best ideas were more than 5 years ago
    The fund is too big
    Terry Smith doesn't do any work
    The fee is too high
    Nike is its biggest holding
    Nike is just a sneaker company
    Fundsmith underperforms x index


Any actual discussion of the fund (holdings / news / valuations) just gets drowned out by those who seem to love posting no matter how true or relevant their offerings are and want to troll the thread.


I think that the Nike point has been exploded, as someone pointed out that the top 10 holdings on HL were incorrect or out of date, and also that recent Nike results have reduced its P/E.

The largest question in my mind is the one I have mentioned but you haven't listed, which is that FS is boxed in to a very narrow universe of very expensive, quality, mega-caps. It was a smart move to spotted these 10 years ago and benefitted from their re-rating but has been more questionable in recent years and I think even more so looking forwards.

But feel free to post on more intellectually stimulating matters such as fund holdings, news and valuations.


No need for the snark when your post is literally about valuations.

The whole ethos of the fund is to buy high quality companies and do nothing, I'm not sure it's such a cutting criticism to blame them for investing in-line with their mandate. Terry Smith has highlighted the re-rating (and its transitory nature) constantly. Furthermore if re-rating is the issue I look forward to you banging that drum on every BG thread.
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bédé
Posted: 06 July 2021 14:12:56(UTC)
#331

Joined: 26/09/2018(UTC)
Posts: 7,895
Frank Marquis;176014 wrote:
if re-rating is the issue I look forward to you banging that drum on every BG thread.
Which comes first, the pro-FS or the anti-BG? Can we learn to share this planet?

My own observation is that the BG faction have been relatively quiet and unemotional compared to the Smith, CGT and Passives factions.
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malc1111
Posted: 06 July 2021 14:21:07(UTC)
#332

Joined: 02/12/2017(UTC)
Posts: 376
bédé;176018 wrote:
Frank Marquis;176014 wrote:
if re-rating is the issue I look forward to you banging that drum on every BG thread.
Which comes first, the pro-FS or the anti-BG? Can we learn to share this planet?

My own observation is that the BG faction have been relatively quiet and unemotional compared to the Smith, CGT and Passives factions.


Like food diet, a good balanced mix is the way to go.
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