If you’re a keen investor then you will have almost certainly heard of the Fundsmith Equity Fund and its high-profile manager Terry Smith. To date the Fundsmith Equity Fund has produced results which are nothing short of spectacular – a total return of 100% in just over four years. But is such rapid growth sustainable?Dividend growth is the driver of sustainable growthWith any sort of investment there are two kinds of value: the market value and the fundamental value (also known as the intrinsic value).The market value of a house, a classic car or a company’s shares can be pretty much anything. If I want to sell my house for £20 then I can, and that will be the market price. On the other hand if someone wants to buy my house for £20 million then that will be the market price instead.The house is essentially the same in both situations but the market price is very different.The fundamental value of an investment is the price an informed and “reasonable” seller or buyer would be happy to accept or pay.Fundamental value is still set by investors and so can vary to some extent, but not anywhere near as much as the market…
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