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Funds to hold alongside Fundsmith Equity and Scottish Mortgage

Popular global equities funds are biased to quality and growth so it could be worth holding something different alongside them
Funds to hold alongside Fundsmith Equity and Scottish Mortgage
  • Large, popular global equities funds tend to have a heavy bias to quality and growth stocks
  • You may want to diversify your holdings in them with global equities funds that take a different approach
  • Diversifying with regional equity funds reduces the risk of holdings in common

You are probably more than familiar with the selling points behind some of the most popular global funds. Fundsmith Equity (GB00B41YBW71), Scottish Mortgage Investment Trust (SMT), Lindsell Train Global Equity (IE00BJSPMJ28) and Rathbone Global Opportunities (GB00BH0P2M97) have made extremely strong returns over the past decade, explaining the frequency with which they appear in portfolios.

There are plenty of important differences between the four. Scottish Mortgage has the biggest focus on Chinese stocks (see 'The China dilemma', IC 24.09.21) and may have a higher risk/reward level than the likes of Fundsmith Equity. Lindsell Train Global Equity's managers, meanwhile, have a greater focus on Japan and little interest in the tech space – something that has hurt performance this year (see 'Explaining Lindsell Train's underperformance', IC, 20.08.21).

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