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Old 04.02.2017, 14:07
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Re: Investment fund

I had a look at Fundsmith perfomance. I'm not impressed. For the most part since the beginning of it's existence, it's performance has been identical to S&P 500. It started outperforming the S&P 500 about 1.5 year ago, but recently the S&P 500 is catching up. Where does the hype of Fatmanfilms come from

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Old 04.02.2017, 15:22
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Re: Investment fund

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I had a look at Fundsmith perfomance. I'm not impressed. For the most part since the beginning of it's existence, it's performance has been identical to S&P 500. It started outperforming the S&P 500 about 1.5 year ago, but recently the S&P 500 is catching up. Where does the hype of Fatmanfilms come from

There is no reason why it should have ever followed the S&P 500. It's investments are very different.
I wonder how this will look in 35 years when you enter retirement. My money is on Fundsmith out performing by a massive factor. Just look at difference in the quality of the companies Fundsmith invest in v S&P500.
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Old 04.02.2017, 18:03
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Re: Investment fund

I asked my Pensionskasse what I would get in return for paying up the money that is "missing" in my account because I started working here only in my thirties.

The result is that the "break-even" comes after a bit more than 13 years of drawing money from the pension-account (after hitting 65, tax-effects not counted).

Somehow, I'm not impressed.

4% yearly returns of the sum in 20 years would essentially double the money.
Though, of course, that doesn't take into account any down-swings.
And to actually get 4%, I'd have to invest at least in some sort of ETF (or FS, of course).
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Old 04.02.2017, 19:06
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Re: Investment fund

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I asked my Pensionskasse what I would get in return for paying up the money that is "missing" in my account because I started working here only in my thirties.

The result is that the "break-even" comes after a bit more than 13 years of drawing money from the pension-account (after hitting 65, tax-effects not counted).

Somehow, I'm not impressed.

4% yearly returns of the sum in 20 years would essentially double the money.
Though, of course, that doesn't take into account any down-swings.
And to actually get 4%, I'd have to invest at least in some sort of ETF (or FS, of course).
I came to CH aged 33 & bought all my back years, it was allowed to pay an unlimited amount back then. When I left I got the money back with very little growth over about 10 years. Worst investment I ever made. 2.5 years later its up hugely thanks to FS.
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  #245  
Old 04.02.2017, 19:24
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Re: Investment fund

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I came to CH aged 33 & bought all my back years, it was allowed to pay an unlimited amount back then. When I left I got the money back with very little growth over about 10 years. Worst investment I ever made. 2.5 years later its up hugely thanks to FS.
Well, you did get the tax refunded for the money you paid, didn't you? Which is easily 30-40℅ when you're in the higher tax brackets. 30% in 10 years is 2.6% return per year, plus you were free to immediately reinvest those 30%, plus the pension fund itself probably paid much more than today's 1%.

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The result is that the "break-even" comes after a bit more than 13 years of drawing money from the pension-account (after hitting 65, tax-effects not counted
Oh, but you should actually consider the tax effects. Because that's pretty much the only thing you're getting out of it. And start looking for a suitable property to cash out the money if you intend to stay in Switzerland - the longer the money stays in pension fund, the more you lose at today's interests they're paying. You can get it out mainly through property, giving up job to start own business or leaving Switzerland for good.
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Old 04.02.2017, 21:02
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Re: Investment fund

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There is no reason why it should have ever followed the S&P 500. It's investments are very different.
I wonder how this will look in 35 years when you enter retirement. My money is on Fundsmith out performing by a massive factor. Just look at difference in the quality of the companies Fundsmith invest in v S&P500.
There is no reason it should follow S&P500, yet it did, for 5 years. Anyway, my argument isn't that it followed the S&P500, but that it is not outperforming it by a lot.

Can you really properly evaluate the quality of companies? Why would the market not take it into consideration? The main pillar of Fundsmith is consumer defensive stock. I guess the idea is that societies will get older and most of their expenses will go into consumer goods. However, I read recently, that it has been already observed, that the oldest societies have also the most of money to invest and they invest in innovation and automation of production.
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Old 04.02.2017, 22:59
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Re: Investment fund

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Well, you did get the tax refunded for the money you paid, didn't you? Which is easily 30-40℅ when you're in the higher tax brackets. 30% in 10 years is 2.6% return per year, plus you were free to immediately reinvest those 30%, plus the pension fund itself probably paid much more than today's 1%.


Oh, but you should actually consider the tax effects. Because that's pretty much the only thing you're getting out of it. And start looking for a suitable property to cash out the money if you intend to stay in Switzerland - the longer the money stays in pension fund, the more you lose at today's interests they're paying. You can get it out mainly through property, giving up job to start own business or leaving Switzerland for good.
The tax refund was nothing like 30-40%. The return on the fund was not far from 1%.

Tax effects were marginal, payout being taxable. I left CH to go & live in the EU aged 52 & took 100% cash which most people say is impossible.

I will repeat, it was the worst investment I ever made.
  #248  
Old 04.02.2017, 23:16
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Re: Investment fund

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The tax refund was nothing like 30-40%. The return on the fund was not far from 1%.
Was the fund "notleidend"?
;-)

That's the problem with paying extra into it (and why I'm really reluctant to do it). If it's going below 100% coverage (i.e. it has promised more payouts than it actually has cash on hand), it has to be rebalanced, which usually means to take a cut.

My pension fund isn't below 100% (109% or so) - but its statistics say that the number of people paying into it vs. the number of retired people drawing money from it has been shrinking for a couple of years. Which is a bit odd, given that Switzerland has a net-positive immigration balance.
Though, it's main customer base is in the Ostschweiz - that may have to do with it.
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Old 04.02.2017, 23:44
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Re: Investment fund

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Was the fund "notleidend"?
;-)

That's the problem with paying extra into it (and why I'm really reluctant to do it). If it's going below 100% coverage (i.e. it has promised more payouts than it actually has cash on hand), it has to be rebalanced, which usually means to take a cut.

My pension fund isn't below 100% (109% or so) - but its statistics say that the number of people paying into it vs. the number of retired people drawing money from it has been shrinking for a couple of years. Which is a bit odd, given that Switzerland has a net-positive immigration balance.
Though, it's main customer base is in the Ostschweiz - that may have to do with it.
No it was an individual account with Swiss Life, poor performance plus transfer out costs of 500 did not help.
  #250  
Old 04.02.2017, 23:52
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Re: Investment fund

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Well, you did get the tax refunded for the money you paid, didn't you? Which is easily 30-40℅ when you're in the higher tax brackets. 30% in 10 years is 2.6% return per year, plus you were free to immediately reinvest those 30%, plus the pension fund itself probably paid much more than today's 1%.


Oh, but you should actually consider the tax effects. Because that's pretty much the only thing you're getting out of it. And start looking for a suitable property to cash out the money if you intend to stay in Switzerland - the longer the money stays in pension fund, the more you lose at today's interests they're paying. You can get it out mainly through property, giving up job to start own business or leaving Switzerland for good.

The premiums were paid gross & tax is payable at a later date....... so no you can't invest the tax saving before the liability occurs. Obviously I never got a tax refund just a lower bill. At times I wonder how much you really understand about the Swiss tax system.
I was never in a particular high tax bracket, spreading the payments over several years would have been better, however being unemployed you can't pay back years so I din not have that choice. My Pension payment was 50 - 60% of taxable salary. (Thats no longer possible today)
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Old 04.02.2017, 23:58
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Re: Investment fund

With tax at source there'd be an actual refund. And lower tax liability to me is as good as refund, there's little difference from accounting perspective. Actually it's even better - you can reinvest the cash immediately
  #252  
Old 05.02.2017, 00:00
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Re: Investment fund

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With tax at source there'd be an actual refund
Sure, assuming one is allowed to complete a tax return.
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Old 05.02.2017, 15:44
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Re: Investment fund

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Sure, assuming one is allowed to complete a tax return.
Even if you don't earn enough to file one, usually pillar 2 and 3 payments entitle to request corrections to tax at source amounts and get some refund nonetheless.

But I'd seriously question the benefit of making such payments at low income levels - as I already said, I think the main big benefit from these schemes is just in tax savings, so you've got to have some significant tax burden to sched in the first place to make the most of it.
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Old 05.02.2017, 16:07
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Re: Investment fund

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Even if you don't earn enough to file one, usually pillar 2 and 3 payments entitle to request corrections to tax at source amounts and get some refund nonetheless.

But I'd seriously question the benefit of making such payments at low income levels - as I already said, I think the main big benefit from these schemes is just in tax savings, so you've got to have some significant tax burden to sched in the first place to make the most of it.
Making an investment 'just for tax purposes' is always going to be a poor investment. Very sad really as you should be able to invest just as successfully in a tax shelter as out. This is to prevent people from losing money
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Old 07.02.2017, 09:50
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Re: Investment fund

Like I mentioned before it has high beta correlation to S&P but much higher fee
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There is no reason why it should have ever followed the S&P 500. It's investments are very different.
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Old 07.02.2017, 10:10
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Re: Investment fund

Not to say that they are more to the passive side and still their managers get 200k+ pounds a year lol for a few transactions every couple of months
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Old 07.02.2017, 10:10
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Like I mentioned before it has high beta correlation to S&P but much higher fee
But I guess it doesn't matter, since the total return chart already includes cost? So If Fundsmith has 1% fees and they were matching S&P, then they were actually outperforming it by 1%?
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Old 07.02.2017, 10:45
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Re: Investment fund

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I had a look at Fundsmith perfomance. I'm not impressed. For the most part since the beginning of it's existence, it's performance has been identical to S&P 500. It started outperforming the S&P 500 about 1.5 year ago, but recently the S&P 500 is catching up. Where does the hype of Fatmanfilms come from
My assumption is wrong so this post should be ignored.

As much as I like that comparison you're comparing apples to oranges because one is in GBP, the other in USD. The comparison might be fair if, for instance, you expressed FS price in USD.

For most of the time after FS's creation the GBP/USD exchange rate has been essentially flat until middle of last year. A dropping GBP means a certain USD amount increases when expressed in GBP. Interestingly enough the timing of the two (GBP drop and FS outperformance) matches quite well. Now, the big question is whether FS hedges currencies, in which case this injunction is void, but given Smith's aversion against derivatives they probably don't.

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  #259  
Old 07.02.2017, 14:36
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Re: Investment fund

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As much as I like that comparison you're comparing apples to oranges because one is in GBP, the other in USD. The comparison might be fair if, for instance, you expressed FS price in USD.
That's not true, I compared Fundsmith T Acc (GBP) with iShares S&P500 Acc (GBP), ticker CSP1. So this chart shows total return in GBP. Fundsmith really was a mirror copy of S&P500 for a long time.

Edit: I checked again on FT website, they list CSP1 in GBX, which is pence sterling. So 3 GBP is 300 GBX. It's all good.

Below image looks interesting. It seems that Fundsmith outperforms S&P by a weak GBP, and underperforms by a strong GBP. Maybe Fundsmith is hedged against a weak GBP? So the ride of the last 1.5 years was maybe just thanks to the devaluating GBP?


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  #260  
Old 07.02.2017, 16:24
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Re: Investment fund

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That's not true, I compared Fundsmith T Acc (GBP) with iShares S&P500 Acc (GBP), ticker CSP1. So this chart shows total return in GBP. Fundsmith really was a mirror copy of S&P500 for a long time.

Edit: I checked again on FT website, they list CSP1 in GBX, which is pence sterling. So 3 GBP is 300 GBX. It's all good.

Below image looks interesting. It seems that Fundsmith outperforms S&P by a weak GBP, and underperforms by a strong GBP. Maybe Fundsmith is hedged against a weak GBP? So the ride of the last 1.5 years was maybe just thanks to the devaluating GBP?

No hedging is used by Fundsmith, their ISP is to own good only companies that future earnings can be fairly accurately predicted & not to try to second guess what will happen tomorrow, next month or next year. They know it's impossible to market time so don't attempt to do so. They are an international fund holding 29 stocks there should be zero correlation to the S&P 500 index, looking for a connection is pointless.
 




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