I heard Terry Smith talk at the Master Investor show in Islington today. Living in Oxford I was fortunate that Islington is no more than a couple of hours away in a great bus+tube combo.
Terry smith has been a broker for many years and is probably best known for publishing a book exposing how very large companies have massaged their accounts. He is a man who has worked in the financial sector for a very long time and has a gift for talking about things in a no-nonsense logical way.
Terry was speaking at the master investor show really as a pitch for his new fund called Fundsmith. The key ideas behind Fundsmith are to invest in large stable companies with good cash-flow (yep real money is being made) and not to change tack. A simple strategy keeps costs down. A modest diversification 20-30 companies gives you the effect of almost total diversification. This also has the additional advantage that a concentrated portfolio allows you to avoid the worst companies that you get in an index. The cost of the fund is 1% a year which strangely is what Virgin (my pension provider) charge for something that is basically a tracker.
I really liked Terry's presentation - and there is a lot of sense in it. There is a fair amount of buffet - the only thing missing is the bit about "margin of safety" and the fact that he is, according to what he says, totally invested rather than with a war chest to spend on the next great idea.
Anyhow as it is much my custom to add videos to the post here is a video of Terry Smith - this is not giving the presentation I heard but being interviewed on Sky news about Fundsmith.
A link to an earlier interview in the Guardian, nothing to do with Fundsmith but very good) can be found here.
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