Should I sell my Fundsmith investment fund shares now or leave it & diversify into another fund?

10 July 2019

Question by Peter

My Fundsmith accumulation Class 1 investment fund has done well over the last 5 years, and its share price today is 412, which is just about the highest it's ever been. Should I bank it now (£ 80,000.00) in case it goes down, or leave it and diversify by reinvesting my £800.00 per month elsewhere in another fund? Many thanks, Peter

Answered by Holly Mackay

Hi Peter,

That’s a hard one.

You’re displaying a typical behavioural finance conundrum - we hate loss twice as much as we like gains!

I think the questions you need to ask yourself are:
Do I need the money or am I still investing for the long term (i.e. at least 5 years)?
Everything could go down - gawd knows what the UK or global economies will do over the short-term quite frankly!

But have you seen anything to make you think that Terry Smith has lost his mojo?

Every dog has its day and styles come and go. But have you seen anything in particular to make you think that Fundsmith is looking less appealing?
If not - why sell now?

You could look at the top 10 holdings in this fund and compare them to other funds you hold?

Are they all the same? Are you properly diversified? If you are doing regular top-ups is this going into a range of regions and styles?

If it’s all going to Fundsmith then you are very exposed to one group and set of individuals.

It’s not an all or nothing decision
Maybe split the top-ups amongst a handful of funds so you have a bit more diversification?

This will be easier to do on an investment platform and not trying to go direct to fund managers.

Sorry - I’ve replied with questions not a direct answer. But I can’t read the future. What I can do is help suggest that you minimise your risk, and that will come with a broader spread of funds and regions.

Hope that helps a bit,

Answered by

Holly Mackay

Founder and CEO of Boring Money

I’ve worked in investment markets for over 20 years. I started out at Merrill Lynch Investment Management and worked at a few big names before setting up my first business in 2008.