Fund Manager Focus with Terry Smith, Fundsmith Equity fund

As fund selectors, we favour managers who’ve demonstrated consistent outperformance of their peer group over time. This gives us confidence that our clients will have a better than average outcome in the long term.

Investing in actively managed funds requires an element of trust and patience, as value is created by the capital allocation decisions of the manager themselves. We don’t believe that trading funds is a recipe for success. Instead it’s the compounding of our chosen managers’ persistent out-performance that delivers results for our clients.

“Since launch, the Fundsmith Equity fund has returned 487.78% compared to 171.07% for the IA Global sector average**”

Terry Smith is one of the country’s most recognised fund managers and we’ve been investing with him for over a decade. His Fundsmith Equity fund is one of the largest collectives in the UK* at over £25 billion. Before launching that fund, he was in charge of the Tullett Prebon pension scheme, which gave us the confidence to invest into the Fundsmith Equity fund as early as we did.

Throughout his career Smith has excelled, whether it was as a banking analyst at Barclays, chief executive at Collins Stewart or at Fundsmith. Since launch, the Fundsmith Equity fund has returned 487.78% compared to 171.07% for the IA Global sector average**. Of the 11 discrete years that Smith has been running that fund, he out-performed his peers across the board – a remarkable level of consistency.

His investment approach resonates with our selection philosophy; find good companies, don’t overpay, do nothing. If you have a high-quality asset backed by supportive financials, earnings growth and strong cashflows, why sell for a shortterm profit when you can eke out the rewards year after year? We feel the same about our funds. If you have an experienced manager with a proven process, then why not try and stay invested for as long as possible?

 

*Source: Financial Express Analytics, Fund Size, Investment Association, as at 19th April 2022 **Source: Financial Express Analytics, Total Return, Bid to Bid, GBP£, 1st November 2010 to 19th April 2022