If you are wondering how to put together a portfolio of equity investments, you could do worse than visit the website for Fundsmith and download lots of relevant documents. These will give you an insight in a particular type of equity investing that I will caricature as ‘Buffett Mk 2.0’.
The outspoken chief executive has delivered table-topping returns with only a little tinkering on his £1.5bn Fundsmith fund.
Investors in Fundsmith Equity, managed by the forthright Terry Smith, have plenty of reasons to be cheerful. On 1 November 2013, its third anniversary, the global equities fund had powered to a total return of 61.2 per cent, placing it fourth among 244 funds in the Global growth sector, and beating the MSCI World index by nearly 20 percentage points.
What has become clear following RDR is that a large number of different parties receive payments from investment funds. The traditional charging structure on funds was ‘bundled’ so a single annual management charge (AMC) was deducted by the fund company to pay the cost of managing the investments, platform services and the annual commission payment to a financial adviser.
Terry Smith thinks the market puts too great a value on bonds compared to the highest-quality shares. Imagine a close relative of yours is gravely ill, and you have the chance to buy a drug that would increase their chances of survival by 10 per cent. What would you pay for the drug?
Terry Smith speaks to The Telegraph about the principles of Fundsmith and his belief that fund managers should be paid for the overall return they deliver.
Fundsmith Equity Fund is to be applauded for delivering a negative portfolio turnover figure of -0.19 per cent.
Ever wondered how the ultra-rich invest their money? One way has been for the wealthy to create special companies or portfolios in which they own a substantial stake - but until now most small investors have not been aware that they, too, could profit from these funds.
The retail distribution review (RDR) and the transparency it will bring has caused the underlying costs of funds to come the fore and led to the launch of a string of investment houses predicated on offering lower-cost models.