Fundsmith is the fund firm Terry Smith ("Britain's Warren Buffett") founded in 2010, with a discipline of radical simplicity — Buy Good Companies, Don't Overpay, Do Nothing: a concentrated book of 20-30 high-ROCE global consumer, healthcare and tech franchises with near-zero turnover. His annual shareholder letters are famous for wit and common sense; peak AUM topped £25bn.
This is Fundsmith's 2012 mid-year report. The fund buys good companies (like Unilever and Microsoft) and earned 7.5% in the first half, beating the stock market average of 5.1%. Remarkably, the manager didn't sell a single stock—turnover (how often trades happen) was negative. They believe in holding great companies for the long term and not trading much. For ordinary investors, this shows that patience and avoiding frequent trades can pay off. Worth a read because it demonstrates how a top manager outperforms by doing almost nothing.
The fund returned 7.5% in the first half of 2012, outperforming all benchmarks including the MSCI World (5.1%). During the period, the largest purchases were Unilever (£15.8m) and Procter & Gamble (£12.5m), with no sales. The turnover rate was -0.19%. The manager emphasized maintaining full position
| Share Class | Period Return (2012.01.01–2012.06.30) | Return Since Inception (from 2010.11.01) |
|---|---|---|
| T Class Acc | 7.5% | 23.6% |
| MSCI World £ | 5.1% | — |
| MSCI EAFE £ | 2.2% | — |
| FTSE 100 | 2.6% | — |
| UK Long Gilt | 3.5% | — |
| Rank | Company | Weight% (2012.06.30) | Weight% 2011.12.31 | Change |
|---|---|---|---|---|
| 1 | Unilever | 6.21 | — | New entry into top five |
| 2 | L'Oreal | 5.19 | 5.34 | Decrease |
| 3 | Dr Pepper Snapple | 5.04 | — | New entry into top five |
| 4 | Microsoft | 4.84 | 5.17 | Decrease |
| 5 | Procter & Gamble | 4.83 | — | New entry into top five |
| Item | Value (T Class Acc) | Note |
|---|---|---|
| Ongoing Charges Figure (OCF) | 1.19% (2012.06.30) | Previous period 1.20% |
| Fund Size (AUM) | £160.9m (2012.06.30) | Previous period £110.1m |
| Portfolio Turnover Rate (PTR) | -0.19% | No sells during the reporting period; only new capital inflows |
| Dividend (per share net income) | 1.5354p | Paid on 31 August 2012 |