Fund manager Terry Smith tends not to follow the herd. As an analyst at Barclays-owned broker BZW in the 1980s, he famously issued a sell note on his parent firm.
The same maverick spirit prompted him to set up the Fundsmith Equity fund at the end of 2010. His aim was to offer a longer-term investment outlook than the typical fund manager, and low charges. "By and large, he has made good on that promise," says Maike Currie in Investors Chronicle. The fund is up 10.9% over a year against a sector average fall of 6%, putting it at the top of the IMA Global sector. Since launch, it's up 21% against a sector rise of 5%.
So what's Smith's secret? He limits the portfolio to 65 global firms (currently the fund only holds 26) and looks for good-quality firms he'd happily hold "indefinitely". The fund is full of companies producing high-turnover consumables 49% of the portfolio is in consumer staples and Smith looks for companies with high barriers to entry.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Top holdings include Unilever, L'Oral, PepsiCo and Serco "consistent performers with strong cash flows", says Ben Griffiths in This is Money.
However, what really marks the fund apart is Smith's attitude to fees. There is no upfront charge and the annual management fee is set at a flat 1%. "We try not to overpay [for companies]," he tells This is Money. "And then we endeavour to do nothing. We... sit on our hands and let those really good returns that those companies produce get to the end investor without any additional cost of dealing." It's an approach that more managed funds would do well to emulate.
Contact: 0330-123 1815
Fundsmith EquityFund top ten holdings
| Unilever |
| L'Oral |
| Dr Pepper Snapple |
| Microsoft |
| Procter & Gamble |
| PepsiCo |
| Automatic Data Processing |
| Stryker |
| Serco |
| Reckitt Benckiser |
