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  1. #1

    Fundsmith Emerging Equity Trust

    I have just been reading General Zod from 5 months ago, with great interest in the replies. I also read "Transactions" with interest about twice a week. This Forum is a wealth of information.
    Still have more to do, before making a lump sum investment, but I doubt whether I would have considered Vanguard until reading so much here -thanks to King Lodos. Plus a lot of other regular contributors, & will click thanks when I have another read through.
    What to do with a lump sum has been covered, so I have a couple of other questions to put.
    I've headlined FEET, so will come back to that.
    The second question is about Black Rock Gold and General. Having held it years ago, I have watched it on and off, and have seen no other fund just keep on going down for years.
    But because, so often advisors recommend holding a portion in gold, when I noticed it climbing up last year I bought, and bought again. Round figures, bought at 8 and sold a short while later for 12. Having watched the price fall again, I thought, "If it falls below 10, I'll buy again." and hold. However, it does not seem to be one to hold, Royal mint has small gold bars they will store, but the spread is quite high. I wonder if Bitcoin has taken the sparkle out of gold.
    I've not read anything about gold on here.
    Back to FEET, Fundsmith was mentioned in General Zod, (I have read the articles on Citywire, and elsewhere, about FEET.) But it is the UK Fundsmith that has all the plaudits.
    OK -so it is China that has boosted emerging market returns this year.
    I would compare FEET with others with a larger holding in India. There was some comparison before with Pacific Horizon and PAC. on here.
    I also hold India Capital Growth. Samesame but different. Kotak did well, then floundered.
    Any readers interested in FEET, who believe Fundsmiths' style will produce the sort of performance followers hope for.? Also, with the emphasis on quality long term holdings do you think it is more safe than other funds in the same area.?

  2. #2
    FEET's not for me. If it ever goes to a decent discount it might be a bit more appealing, but it's under performed the sector 3 years in a row and has some of the highest charges too. PAC also has a third of its portfolio in India but is 28% ahead of FEET over 3 years. For frontier markets I'd much rather go with BRFI, which has the performance to justify its high charges, but not on a premium of 11%.

  3. #3
    The idea behind FEET appeals to me, but when I look at company accounts and profits derived from Asia and developing markets I realise that I could get plenty of exposure from the likes of ULVR, PG, Nestle, MDLZ and numerous other producers of consumer staples.

    Several of FEET's holdings will also be part owned by the large global players, or producing products for them under license.

    I suppose the iShares Global staples ETF (KXI) or similar could do the same for 0.5% fees. The Vanguard S&P version is 0.15%

    I hold PG & MDLZ and a few more not named here.

  4. #4
    Investing in gold *miners* (which is what you're doing when you invest in Black Rock Gold and General) is a different beast from investing in physical gold. In normal times a rise in gold prices will boost the value of both... however if you look into what happens when things really turn ugly (which is probably when you were most hoping these holdings will show their worth), you may well see gold miners' stock prices heading south even as physical gold soars. Play around with https://www.portfoliovis...-asset-class-allocation to see what I mean (it has "Gold" and "Precious Metals" asset classes, but that "Precious Metals" is actually gold miners' stocks rather than the commodity).

    There are plenty of efficient ways of getting exposure to physical gold (e.g SGLN - iShares Physical Gold ETC but there are many other options. Of course the real goldbugs would tell you "if you can't hold it you don't own it").

    Gold does occasionally get mentioned here, usually in connection with its role as part of a broadly diversified multi-asset portfolio. See threads like https://moneyforums.city...-IT-Fund-Portfolio.aspx and maybe http://moneyforums.cityw...st4470_ETF-of-ETFs.aspx . I doubt you'll find any discussion of "is it a good time to buy gold?" (or miners) here; it's more of interest for its diversifying/uncorrelated aspects.

  5. #5
    I like the idea behind FEET and have some.

    The only thing that bothers me is that Terry Smith said a while ago that he'd be shocked if FEET didn't outperform Fundsmith (due to its portfolio having higher returns on capital invested). Then a few months later, when he had a couple of hundred million burning a hole in his pocket, he chucked it all in ... Fundsmith, not FEET!

  6. #6
    It's nice he's made something that's really going to perform differently from the usual EM fund.

    But average fwd PEs around 28 .. P/B 8.

    I'd have seen EM as a chance to pick up Fundsmith-like companies on *lower* valuations .. It's a real bet on his philosophy of buying profitability .. But if the companies were that good – good enough to justify the higher trading costs and lower liquidity – wouldn't any of them feature in Fundsmith? .. I'm certainly watching with interest .. It's a difficult strategy to backtest fairly – Buffett knows profitability is the real driver of returns, but also knows you can overpay for things

  7. #7
    It's nice he's made something that's really going to perform differently from the usual EM fund.

    But average fwd PEs around 28 .. P/B 8.

    I'd have seen EM as a chance to pick up Fundsmith-like companies on *lower* valuations .. It's a real bet on his philosophy of buying profitability .. But if the companies were that good good enough to justify the higher trading costs and lower liquidity wouldn't any of them feature in Fundsmith? .. I'm certainly watching with interest .. It's a difficult strategy to backtest fairly Buffett knows profitability is the real driver of returns, but also knows you can overpay for things


 

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