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  #761  
Old 29.06.2021, 16:32
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Re: Equity Portfolio Advice

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The value of the business does not increase just because you give shareholders 4 new shares for every 1 they held before.

If the price went up & the income stream remained the same the value dropped, this seems to be missed by many new investors & will cost them dearly as they pay too much.
I think the only time you should really except a bump is where the share price is so onerous it is effectively out of limits to retail investors, and thus limits demand.

Eg. if Lindt (share price 99K CHF) did a 10,000/1 split you probably would expect a couple of % permanently.
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  #762  
Old 29.06.2021, 19:30
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Re: Equity Portfolio Advice

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I think the only time you should really except a bump is where the share price is so onerous it is effectively out of limits to retail investors, and thus limits demand.

Eg. if Lindt (share price 99K CHF) did a 10,000/1 split you probably would expect a couple of % permanently.
As you see with Berkshire Hathaway the B shares do not trade above the A shares for very long, admittedly you can convert A to B.
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  #763  
Old 29.06.2021, 20:32
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Re: Equity Portfolio Advice

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As you see with Berkshire Hathaway the B shares do not trade above the A shares for very long, admittedly you can convert A to B.
BRKB has diminished voting rights - so the institutions will go A and the private investors B.

If there was only one class a share price of 400k would clearly reduce demand for the shares.
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  #764  
Old 05.07.2021, 18:02
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Re: Equity Portfolio Advice

Quick update on Pillar 3a:

Finpension now charge 750 CHF for withdrawal if the holder is domiciled abroad and the funds have been with Finpension for less than a year.

Basically they want to avoid being used solely as a stepping stone for their Kanton Schwyz low tax withholding tax rates.

I don't think this really matters. Their funds are good enough even if you are resident abroad that you could just keep them with Finpension for a year before withdrawing.
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  #765  
Old 05.07.2021, 19:08
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Re: Equity Portfolio Advice

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Fundsmith EU which shows prices in $/£/CHF/€ no longer has an identical portfolio than the UK fund, the shares held are the same, however the quantities are different.
FMF, do you have any information why they are different? I am wondering if there is a strategic reason. Or alternatively if it is just a practical point that there is no benefit in them trying to keep them aligned with a high level of precision.
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  #766  
Old 05.07.2021, 19:37
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Re: Equity Portfolio Advice

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FMF, do you have any information why they are different? I am wondering if there is a strategic reason. Or alternatively if it is just a practical point that there is no benefit in them trying to keep them aligned with a high level of precision.
"Do Nothing" the most difficult part of the strategy.

They generally don't rebalance for the hell of it as trading costs money, subscriptions & redemptions come at different times is the main reason reason. Originally the Lux fund was a 'feeder fund' 100% invested in the UK fund, so tracked perfectly less the higher fee. Because of BREXIT they had to separate them.
One member voiced concern of 'feeder funds' in general & the lux fund has had more investment since, so probably some institutional investors agreed.

As Terry Smith says, the more he deals the more mistakes he makes.
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  #767  
Old 06.07.2021, 15:24
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Re: Equity Portfolio Advice

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"Do Nothing" the most difficult part of the strategy.

They generally don't rebalance for the hell of it as trading costs money, subscriptions & redemptions come at different times is the main reason reason. Originally the Lux fund was a 'feeder fund' 100% invested in the UK fund, so tracked perfectly less the higher fee. Because of BREXIT they had to separate them.
One member voiced concern of 'feeder funds' in general & the lux fund has had more investment since, so probably some institutional investors agreed.

As Terry Smith says, the more he deals the more mistakes he makes.
One reason why I generally prefer trusts to open ended funds. Usually less trading. Another is that many trusts don't pay dividends, e.g. ATT, EWI so the gains are entirely tax free in Switzerland. SMT has a dividend, but its tiny.
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  #768  
Old 06.07.2021, 17:21
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Re: Equity Portfolio Advice

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One reason why I generally prefer trusts to open ended funds. Usually less trading. Another is that many trusts don't pay dividends, e.g. ATT, EWI so the gains are entirely tax free in Switzerland. SMT has a dividend, but its tiny.
Smithson does not pay a dividend as the running costs exceed the income to the trust, thats usually the situation if there is no pay out.
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  #769  
Old 19.07.2021, 22:15
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Re: Equity Portfolio Advice

Is Smithson now a bit of a misnomer? I see the average market cap is now £10.5 billion. I’ve not looked at the market cap of each holding but as an average this a long way from small cap. Any thoughts on this?
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  #770  
Old 19.07.2021, 22:57
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Re: Equity Portfolio Advice

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Is Smithson now a bit of a misnomer? I see the average market cap is now £10.5 billion. I’ve not looked at the market cap of each holding but as an average this a long way from small cap. Any thoughts on this?
It's a pure mid cap fund. I don't think Smiths style of investing suits small caps. By his own admission he looks for companies that have already won. Such companies aren't generally small caps.
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  #771  
Old 20.07.2021, 07:17
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Re: Equity Portfolio Advice

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Is Smithson now a bit of a misnomer? I see the average market cap is now £10.5 billion. I’ve not looked at the market cap of each holding but as an average this a long way from small cap. Any thoughts on this?
They were expecting an average market cap of 7.5 billion at inception, the fund is up 80% so the market cap of their target stocks has also grown. It was always more mid cap than small. Remember it's still a fund of companies that have already 'won' so to speak.
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  #772  
Old 20.07.2021, 08:27
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Re: Equity Portfolio Advice

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It's a pure mid cap fund. I don't think Smiths style of investing suits small caps. By his own admission he looks for companies that have already won. Such companies aren't generally small caps.
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They were expecting an average market cap of 7.5 billion at inception, the fund is up 80% so the market cap of their target stocks has also grown. It was always more mid cap than small. Remember it's still a fund of companies that have already 'won' so to speak.
You both confirm what I thought, ie the companies have already won. I would like to include a small allocation to small and perhaps even micro cap companies. They need to be companies that are going to win
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  #773  
Old 20.07.2021, 08:35
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Re: Equity Portfolio Advice

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You both confirm what I thought, ie the companies have already won. I would like to include a small allocation to small and perhaps even micro cap companies. They need to be companies that are going to win
Smithson is capitalised at £2.9 billion so very small caps are not possible with a fund that will hold 25-40 stocks. The average cap of 10 billion makes sense so the average holding is no more than 1% of the target company.

The median company was founded in 1972, so 49 years old, they have already won!
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  #774  
Old 20.07.2021, 08:45
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Re: Equity Portfolio Advice

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Smithson is capitalised at £2.9 billion so very small caps are not possible with a fund that will hold 25-40 stocks. The average cap of 10 billion makes sense so the average holding is no more than 1% of the target company.

The median company was founded in 1972, so 49 years old, they have already won!
Makes perfect sense. It’s for these reasons I feel some exposure to smaller companies may be warranted, particularly with an investment horizon like mine. I guess this may be where Baillie Gifford comes in but when I looked at their offerings I was a bit mystified and simply haven’t yet took the time to research further. Another alternative is stock picking of course but I’m not interested in playing with fire just yet.

Last edited by Polymath; 20.07.2021 at 09:03.
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  #775  
Old 20.07.2021, 09:44
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Re: Equity Portfolio Advice

For me the attraction of Smithson is that it applies the same Return on Capital Employed criteria that has worked for Fundsmith but to mid size stocks and that Fundsmith would like to buy can no longer do due to the Fundsmith fund having grown too large.

I guess for similar reasons it becomes more and more complicated to run a similar fund the smaller the stocks become
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  #776  
Old 20.07.2021, 11:00
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Re: Equity Portfolio Advice

The attraction of Smithson for me was a likely higher compound rate of return for only slightly more risk, but lowering the risk for an overall higher return combined.
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  #777  
Old 20.07.2021, 11:37
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Re: Equity Portfolio Advice

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The attraction of Smithson for me was a likely higher compound rate of return for only slightly more risk, but lowering the risk for an overall higher return combined.
This it was makes it hugely attractive combined with Fundsmith. I’m just asking myself if up to 10% of my portfolio could be allocated to companies that are likely to eventually make their way into the investible universe of Smithson. Probably what’s termed ‘disrupters’.

HickvonFrick commented earlier in the thread that this is why some of BG’s offerings are complementary. I can see the logic in that and this is what contributes to the contemplation that my portfolio is missing something. I chose to be patient so far as this knowledge only came after a huge run up in BG’s offerings. I certainly didn’t want to jump on the FOMO bandwagon.

There must be opportunities in the micro and small cap space, but as has been alluded to, the sheer size of many equity funds/ investment trusts precludes them from exploiting these opportunities. I should probably also add a small allocation to emerging markets but more research needed here too.
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  #778  
Old 20.07.2021, 12:00
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Re: Equity Portfolio Advice

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This it was makes it hugely attractive combined with Fundsmith. I’m just asking myself if up to 10% of my portfolio could be allocated to companies that are likely to eventually make their way into the investible universe of Smithson. Probably what’s termed ‘disrupters’.

HickvonFrick commented earlier in the thread that this is why some of BG’s offerings are complementary. I can see the logic in that and this is what contributes to the contemplation that my portfolio is missing something. I chose to be patient so far as this knowledge only came after a huge run up in BG’s offerings. I certainly didn’t want to jump on the FOMO bandwagon.

There must be opportunities in the micro and small cap space, but as has been alluded to, the sheer size of many equity funds/ investment trusts precludes them from exploiting these opportunities. I should probably also add a small allocation to emerging markets but more research needed here too.
I have a small allocation on startups (probably not what you are after) ... most don't "win" but it's a real learning experience for me and to be honest it adds some fun. I also get to meet some really interesting people doing some "crazy stuff" which is actually the fun piece of it
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  #779  
Old 20.07.2021, 13:30
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Re: Equity Portfolio Advice

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This it was makes it hugely attractive combined with Fundsmith. I’m just asking myself if up to 10% of my portfolio could be allocated to companies that are likely to eventually make their way into the investible universe of Smithson. Probably what’s termed ‘disrupters’.

HickvonFrick commented earlier in the thread that this is why some of BG’s offerings are complementary. I can see the logic in that and this is what contributes to the contemplation that my portfolio is missing something. I chose to be patient so far as this knowledge only came after a huge run up in BG’s offerings. I certainly didn’t want to jump on the FOMO bandwagon.

There must be opportunities in the micro and small cap space, but as has been alluded to, the sheer size of many equity funds/ investment trusts precludes them from exploiting these opportunities. I should probably also add a small allocation to emerging markets but more research needed here too.
EWI owns a lot of smaller companies, but isn't really a proper small cap fund. It owns Tesla for a start!

SMT owns a lot of private equity that still has a lot of growth in the tank (even if not small).

Don't think that there is a pure play global small gap in BG. EWI is the closest.
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  #780  
Old 20.07.2021, 14:02
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Re: Equity Portfolio Advice

I guess Woodford would have ticked the boxes………
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