I wrote here this week about the kind of focused stock-picking funds that I felt we should be invested inif we wanted to survive a decade in a sideways market. I also asked for suggestions.
The top offering so far is Terry Smith's Fundsmith Equity fund. A good many people (including Terry Smith) emailed to say that not mentioning it was a grave omission. They were probably right.
This Smith's first offering under the brand has delivered exceptionally impressive performance since its launch last year. It was up 7.8% in 2011, even as the IMA Global Growth sector as a whole fell nearly 10%; and this year it has delivered its investors an impressive 7% so far.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
There is no guaranteeing that this will continue, but the fund does offer the main thing I said I was looking for focus. The plan is to always hold only between 20 and 30 stocks, all of which are in "high quality, resilient, global growth companies that are good value and which we intend to hold for a long time, and in which we invest our own money."
The downside is that if you buy the fund via a platform that does not rebate trail commission (which you shouldn't), it will cost you 1.5% a year in management fees. If you buy it direct, it will only cost you 1%. And while that is more than some other good active funds, the fact that Smith keeps his trading costs exceptionally low means that the overall cost should, I hope, be a reasonable one. Smith also tells me that he will keep an eye on his fees and cut them if needs be. However, he also tells me that he wanted to have "a low cost fund, not the lowest cost fund."
One reader who holds the fund told me that just having a fund with a strategy of such "clear reasoned objective stock picking" means that he can "live and sleep well and look forward to getting old." That's quite something to get out of an equity fund: it is also something for Mr Smith, assuming he keeps delivering, to be pretty pleased with.
Other suggestions included the Scottish Mortgage Investment Trust, which has a great record, is relatively focused (37 holdings) and like all Baillie Gifford run investment trusts is cheap. You can see the details on it here. But we do like it so much so that it is one of the trusts in our model portfolio subscribers can look at the others here.
-
Should you invest in UK equities?The FTSE 100 hit a record high this week, but UK equities remain unloved and undervalued compared to their global and US peers. Should you snap them up at a discount?
-
State pension errors: DWP urged to check for mistakes among divorced peopleFormer pensions minister Steve Webb says there are a high number of divorced women on low state pensions. Now MPs want the DWP to check if there were any errors in “potentially underpaying men and women who are divorced”.
-
House prices to crash? Your house may still be making you money, but not for much longerOpinion If you’re relying on your property to fund your pension, you may have to think again. But, says Merryn Somerset Webb, if house prices start to fall there may be a silver lining.
-
Prepare your portfolio for recessionOpinion A recession is looking increasingly likely. Add in a bear market and soaring inflation, and things are going to get very complicated for investors, says Merryn Somerset Webb.
-
Investing for income? Here are six investment trusts to buy nowOpinion For many savers and investors, income is getting hard to find. But it's not impossible to find, says Merryn Somerset Webb. Here, she picks six investment trusts that are currently yielding more than 4%.
-
Stories are great – but investors should stick to realityOpinion Everybody loves a story – and investors are no exception. But it’s easy to get carried away, says Merryn Somerset Webb, and forget the underlying truth of the market.
-
Everything is collapsing at once – here’s what to do about itOpinion Equity and bond markets are crashing, while inflation destroys the value of cash. Merryn Somerset Webb looks at where investors can turn to protect their wealth.
-
Value is starting to emerge in the marketsOpinion If you are looking for long-term value in the markets, some is beginning to emerge, says Merryn Somerset Webb. Indeed, you may soon be able to buy traditionally expensive growth stocks on the cheap, too.
-
ESG investing could end up being a classic mistakeOpinion ESG investing has been embraced with enormous speed and zeal. But think long and hard before buying in, says Merryn Somerset Webb.
-
UK house prices will fall – but not for a few yearsOpinion UK house prices look out of reach for many. But the truth is that British property is surprisingly affordable, says Merryn Somerset Webb. Prices will fall at some point – but not yet.
