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Baillie Gifford Global Discovery
mcminvest
Posted: 21 May 2018 19:56:20(UTC)
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Thinking of going with this, anyone have any opinion on it?
Sara G
Posted: 21 May 2018 20:21:50(UTC)
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I believe it is the open-ended equivalent of EWI, which is my best performing IT over the past year or so. The OEIC has underperformed the lT during that period - probably due to gearing and the premium - but the OEIC is still a good choice in my view. You could always transfer to the IT if it falls to a discount in the future.
King Lodos
Posted: 21 May 2018 21:11:52(UTC)
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It's been a top performer for a while ..

However .. if you keep buying funds after they've outperformed for a year, you're going to keep buying things a year after you should've bought them.

You *can* ride momentum in funds like this, but then you've got to work out when to sell – otherwise you're going to miss 90% of the upside, and catch 100% of the downside .. Which is what most investors do ... Buying the best performer is easy .. Selling at the point when it stops being a top performer is the challenge – and you really need to work out a reliable way to do that, because there aren't formulas for this .. Or you need to pick funds on some other criteria

2 users thanked King Lodos for this post.
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mcminvest
Posted: 21 May 2018 21:14:55(UTC)
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Sara G;62621 wrote:
I believe it is the open-ended equivalent of EWI, which is my best performing IT over the past year or so. The OEIC has underperformed the lT during that period - probably due to gearing and the premium - but the OEIC is still a good choice in my view. You could always transfer to the IT if it falls to a discount in the future.


Thanks Sara! Any thoughts on UK? I think managed is better and Mid/Small CAP Funds give better returns.
Tom Bards
Posted: 21 May 2018 21:15:42(UTC)
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Good smaller companies fund. Charges on EWI are a little high so I went with this instead

Bought it at the beginning of April, its currently up 15% for me.
mcminvest
Posted: 21 May 2018 21:21:28(UTC)
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King Lodos;62625 wrote:
It's been a top performer for a while ..

However .. if you keep buying funds after they've outperformed for a year, you're going to keep buying things a year after you should've bought them.

You *can* ride momentum in funds like this, but then you've got to work out when to sell – otherwise you're going to miss 90% of the upside, and catch 100% of the downside .. Which is what most investors do ... Buying the best performer is easy .. Selling at the point when it stops being a top performer is the challenge – and you really need to work out a reliable way to do that, because there aren't formulas for this .. Or you need to pick funds on some other criteria



Thanks King! I get what you are saying but I gotta dive in somewhere before my head fries from researching. If I have to try and work out what will be best performer from now I'l be here til doomsday. lol
2 users thanked mcminvest for this post.
King Lodos on 21/05/2018(UTC), Monty Claret on 23/05/2018(UTC)
King Lodos
Posted: 21 May 2018 21:30:45(UTC)
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Well pick an index fund .. Seriously.

Although I couldn't tell you how long this fund's run of outperformance will last, making a sensible decision is a much better investment in yourself than making a knee-jerk one.

It's like any form of gambling (betting without an edge), sometimes the worst outcome is that you win – because that teaches you a lesson that'll lead to 100 worse decisions in the future .. Choosing anything other than an index, when you don't know, is irrational .. (just my 2c – I'm very strict on things like this)

2 users thanked King Lodos for this post.
AimingforFIRE on 22/05/2018(UTC), Law Man on 22/05/2018(UTC)
mcminvest
Posted: 21 May 2018 21:35:40(UTC)
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King Lodos;62631 wrote:
Well pick an index fund .. Seriously.

Although I couldn't tell you how long this fund's run of outperformance will last, making a sensible decision is a much better investment in yourself than making a knee-jerk one.

It's like any form of gambling (betting without an edge), sometimes the worst outcome is that you win – because that teaches you a lesson that'll lead to 100 worse decisions in the future .. Choosing anything other than an index, when you don't know, is irrational .. (just my 2c – I'm very strict on things like this)



Finding it hard to disagree with you but what is the difference in the performance of this and say Fundsmith Equity which gets recommended everywhere you look on here and elsewhere? I'm not digging at you here, i'm just stretching this out to gain an understanding
King Lodos
Posted: 21 May 2018 21:55:42(UTC)
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Well I think you have to be every bit as careful with funds like Fundsmith .. I was concerned it was just the Consumer Staples index, and that it had been lucky .. I said on here: I need to see its performance differentiate itself before I'd be happy holding it – and that took years, over which I'd bought in and out a bit.

The difference right now is Fundsmith's average valuations on Morninstar are PE 23, vs BG Discovery on 40 .. Fundsmith's also been underperforming for a year (vs BG at the very top), so if you're a longer-term investor, now might be a slightly better time to buy Fundsmith.

99% of the reason you should buy Fundsmith is you like the strategy and managers .. That's why I buy the Lindsell Train funds (which, because of their longer record and simpler strategy, I put more trust in – possibly the only fund managers I do trust a bit implicitly) .. But I also buy high momentum funds – I bought BG Positive Change the other week – but I wouldn't think of them as investments .. they're trades .. and trading is a different set of reading material
Tyrion Lannister
Posted: 21 May 2018 22:40:05(UTC)
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mcminvest;62629 wrote:
King Lodos;62625 wrote:
It's been a top performer for a while ..

However .. if you keep buying funds after they've outperformed for a year, you're going to keep buying things a year after you should've bought them.

You *can* ride momentum in funds like this, but then you've got to work out when to sell – otherwise you're going to miss 90% of the upside, and catch 100% of the downside .. Which is what most investors do ... Buying the best performer is easy .. Selling at the point when it stops being a top performer is the challenge – and you really need to work out a reliable way to do that, because there aren't formulas for this .. Or you need to pick funds on some other criteria



Thanks King! I get what you are saying but I gotta dive in somewhere before my head fries from researching. If I have to try and work out what will be best performer from now I'l be here til doomsday. lol


Past performance is all we really have to go on. How else do you select one fund over another?

Good fund managers tend to out perform consistently. This fund has been managed by Doulas Broadie for the last 7 years and it’s consistently been in the top quartile for all of that time. Imo, this should be a solid investment.

Another global small cap fund worth considering is Standard Life Global Smaller Companies.



Tyrion Lannister
Posted: 21 May 2018 22:48:03(UTC)
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King Lodos;62634 wrote:
Well I think you have to be every bit as careful with funds like Fundsmith .. I was concerned it was just the Consumer Staples index, and that it had been lucky .. I said on here: I need to see its performance differentiate itself before I'd be happy holding it – and that took years, over which I'd bought in and out a bit.

The difference right now is Fundsmith's average valuations on Morninstar are PE 23, vs BG Discovery on 40 .. Fundsmith's also been underperforming for a year (vs BG at the very top), so if you're a longer-term investor, now might be a slightly better time to buy Fundsmith.

99% of the reason you should buy Fundsmith is you like the strategy and managers .. That's why I buy the Lindsell Train funds (which, because of their longer record and simpler strategy, I put more trust in – possibly the only fund managers I do trust a bit implicitly) .. But I also buy high momentum funds – I bought BG Positive Change the other week – but I wouldn't think of them as investments .. they're trades .. and trading is a different set of reading material


Fundsmith and BG global discovery are both excellent funds but apart from that they are very different.

The PE comparison is largely irrelevant, primarily because the latter is a small cap fund and good small cap companies in rapid growth tend to have a high PE, relative to larger companies, for obvious reason.
King Lodos
Posted: 22 May 2018 02:49:09(UTC)
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Going on past performance is why the average fund investor (re: the Dalbar study) only returns 2% annually .. and they all *believe* they're doing a lot better than that.

Take Morningstar star ratings for example (a measure of past performance):

..if you look at the performance of funds that were rated at the end of 2008 (during the credit crisis) and follow them through the end of 2011, you'll see that the one-star funds did the absolute best of all and the five-star funds did the worst. When markets change direction, the stars lead you astray.

Just picking based on the stars is not a recipe for success. You need to evaluate a fund based not solely on past performance, but also expenses, the fund family, the assets in the fund and more.


http://www.investmentnews.com/article/20151204/BLOG09/151209957/debunking-4-common-myths-advisers-have-about-mutual-funds


There are certainly reasons valuations differ between styles, factors, etc. But .. as quants like Cliff Asness will tell you: raw PE ratio is still about as predictive as anything there is .. It does tell you what you're buying – whether your £100 is buying you £10 of earnings, or £2.

As they say: you can't buy past returns .. As a momentum investor myself, my only edge is that there are people who are slower to buy top performers, and then slower to sell when they become underperformers .. I profit from performance chasers .. There's a curve, and if you're not ahead of it, then you're behind it
4 users thanked King Lodos for this post.
Tim D on 22/05/2018(UTC), AimingforFIRE on 22/05/2018(UTC), Law Man on 22/05/2018(UTC), J Thomas on 26/05/2018(UTC)
Tyrion Lannister
Posted: 22 May 2018 04:17:54(UTC)
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Past returns have always been an important factor in my choice of funds, or more correctly choice of fund manager. I don’t measure my returns accurately but I know for sure they have been significantly better than 2%! More in the region of 10%.

I’d be interested to know what key factors you use to choose funds, you’ve said several times that momentum is one of your key strategies - anything else?
mcminvest
Posted: 22 May 2018 06:33:10(UTC)
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The biggest factor forgotten here and in other threads is TIME! It's all very fine suggesting looking at this factor and that figure and that figure and performance etc. but I'm sure like me, a lot of amateur investors don't have the TIME to assess everything. King makes great contributions on here but I'm with Tyrion on this one, we can only go with what is in front of us and past performance is one of them. I have a wife and 2 kids (just an ordinary guy) so I'd rather be invested in what I perceive to be a 'winner' than a 'loser'. Great contributions so far, keep it up!
King Lodos
Posted: 22 May 2018 06:52:47(UTC)
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The 2% is measured through several decades – so 2 or 3 complete market cycles .. and it's the rotations – e.g. from growth to value; from momentum to mean reversion – where people really come off the rails.

It's why bull markets (where you'd have to try hard not to make >10% returns) are really bad learning environments .. The only lesson is: have market exposure .. Very likely you haven't needed to do a thing – in which case you've probably learnt a lot of odd behaviours that don't achieve anything.

Well ultimately there are only three things that have any relation to future returns: fundamentals, technicals and macro (or value, momentum and what's going on in the world) .. Past performance in general doesn't – or it's negative .. So I look at those things – but if you could say with any certainty that a particular fund will do well or poorly over a certain period, it's a puzzle .. There's no simple answer

Sara G
Posted: 22 May 2018 07:25:42(UTC)
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mcminvest;62626 wrote:
Sara G;62621 wrote:
I believe it is the open-ended equivalent of EWI, which is my best performing IT over the past year or so. The OEIC has underperformed the lT during that period - probably due to gearing and the premium - but the OEIC is still a good choice in my view. You could always transfer to the IT if it falls to a discount in the future.


Thanks Sara! Any thoughts on UK? I think managed is better and Mid/Small CAP Funds give better returns.


For UK small and mid caps I hold SLS, ASL (growth and value styles respectively) and RMMC, bought recently when it fell to a discount due to a change in management. Generally for the UK I'm focused on individual shares at the moment though as that is where I am seeing the most value.

On the original question I have to agree with KL to a large extent - the reason I have done so well with EWI is that I bought it when it was in the doldrums and on a discount, and BG had just decided to tilt the fund towards small caps. That's not to say you've missed the boat on this or the Discovery fund, but it may be safer to drip feed rather than go all in at this point.
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mcminvest on 22/05/2018(UTC), King Lodos on 22/05/2018(UTC)
Tom Bards
Posted: 22 May 2018 07:57:12(UTC)
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King Lodos;62644 wrote:
The 2% is measured through several decades – so 2 or 3 complete market cycles .. and it's the rotations – e.g. from growth to value; from momentum to mean reversion – where people really come off the rails.

It's why bull markets (where you'd have to try hard not to make >10% returns) are really bad learning environments .. The only lesson is: have market exposure .. Very likely you haven't needed to do a thing – in which case you've probably learnt a lot of odd behaviours that don't achieve anything.

Well ultimately there are only three things that have any relation to future returns: fundamentals, technicals and macro (or value, momentum and what's going on in the world) .. Past performance in general doesn't – or it's negative .. So I look at those things – but if you could say with any certainty that a particular fund will do well or poorly over a certain period, it's a puzzle .. There's no simple answer




While I generally agree with what you're saying, where is this argument in relation to Lindsell Train? If we are going to see a switch from growth to value etc. then why does Lindsell Train have pretty much the exact same performance over the last five years as Global Discovery. Are you saying that Lindsell Train performance will get even better while Global Discovery will start to falter?

These arguments would work better if Lindsell Train/Fundsmith had underperformed the more growth orientated/high PE funds but they haven't, they have outperformed them all except Global Discovery. It appears to me that they are all in the same boat and the warnings here about Global Discovery could also be made about Fundsmith/Lindsell Train.

By your own argument here you shouldn't be holding Lindsell Train long term either, seeing as it has basically the exact same performance as Global Discovery and is therefore likely to underperform in the future.

You bought Positive Change for the momentum, which makes sense, I hold it too for the same reason, yet its PE is 28 and Lindsell Train Japanese Equity is 26 which you've said you own as a more longer term holding. Why is the former a momentum fund but the latter is not?
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Aminatidi on 26/05/2018(UTC)
mcminvest
Posted: 22 May 2018 08:44:18(UTC)
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Sara G;62646 wrote:
mcminvest;62626 wrote:
Sara G;62621 wrote:
I believe it is the open-ended equivalent of EWI, which is my best performing IT over the past year or so. The OEIC has underperformed the lT during that period - probably due to gearing and the premium - but the OEIC is still a good choice in my view. You could always transfer to the IT if it falls to a discount in the future.


Thanks Sara! Any thoughts on UK? I think managed is better and Mid/Small CAP Funds give better returns.


For UK small and mid caps I hold SLS, ASL (growth and value styles respectively) and RMMC, bought recently when it fell to a discount due to a change in management. Generally for the UK I'm focused on individual shares at the moment though as that is where I am seeing the most value.

On the original question I have to agree with KL to a large extent - the reason I have done so well with EWI is that I bought it when it was in the doldrums and on a discount, and BG had just decided to tilt the fund towards small caps. That's not to say you've missed the boat on this or the Discovery fund, but it may be safer to drip feed rather than go all in at this point.


Sara, thanks, I am seeing an AMC of 0.75% and also an ongoing charge of 5.52% for RMMC, I find it hard to believe the charge is 5.52%. I got my info from RMMC website and the AIC. Can you let me know what it actually is? ta!
King Lodos
Posted: 22 May 2018 15:27:08(UTC)
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Tom Bards;62647 wrote:
While I generally agree with what you're saying, where is this argument in relation to Lindsell Train? If we are going to see a switch from growth to value etc. then why does Lindsell Train have pretty much the exact same performance over the last five years as Global Discovery. Are you saying that Lindsell Train performance will get even better while Global Discovery will start to falter?

These arguments would work better if Lindsell Train/Fundsmith had underperformed the more growth orientated/high PE funds but they haven't, they have outperformed them all except Global Discovery. It appears to me that they are all in the same boat and the warnings here about Global Discovery could also be made about Fundsmith/Lindsell Train.

By your own argument here you shouldn't be holding Lindsell Train long term either, seeing as it has basically the exact same performance as Global Discovery and is therefore likely to underperform in the future.

You bought Positive Change for the momentum, which makes sense, I hold it too for the same reason, yet its PE is 28 and Lindsell Train Japanese Equity is 26 which you've said you own as a more longer term holding. Why is the former a momentum fund but the latter is not?


I wouldn't get ahead of myself and say I will always be devoted to the Lindsell Train approach .. Like the old saying "When my information changes, I change my mind."

They're very different .. Lindsell Train's in companies with long histories, enduring brand value .. Positive Change is generally in newer companies – some of which aren't profitable yet.

As I think LT have said: the big question in investing these days isn't: which is cheaper? It's: which is likely to disrupt and which is likely to be disrupted? .. We're buying companies (like Tesla) that destroy value, because we might be buying a bit of the future economy .. It's just that in the past, that's always led to disappointment .. I have no idea whether that past will repeat, but I know I'm too conservative to bet everything on the SMT view .. I didn't expect LT to outperform this year – and of course a lot of that outperformance is a fluke on Japan having a burst (which could well be due a correction)

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Aminatidi on 26/05/2018(UTC)
Jim S
Posted: 22 May 2018 15:55:32(UTC)
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Re Baillie Gifford Global Discovery, it seems like a sound choice to me too. BG have had a strong run with a range of funds recently.

For UK small caps, I think there's a strong argument for going the Investment Trust route in this sector because UK small cap ITs tend to be on heavy discounts - eg. look at SVM UK Emerging. The sector is not very popular these days due to Brexit and Corbyn concerns. However the underlying share prices should already reflect this risk, so personally I think the Investment Trust discounts are overdone.

But if you prefer an OEIC with a strong track record for UK small caps, you could do a lot worse than choose Marlborough UK Microcap Growth managed by Giles Hargreaves.

Point taken about past performance not necessarily correlating to future returns, however a strong track record over time does usually indicate some skill in stock-picking.

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mcminvest on 22/05/2018(UTC), Aminatidi on 26/05/2018(UTC)
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