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 a 2017 mid-year report for a fund that returned 13.4% in six months, far outpacing global stocks (5.3%) and UK stocks (4.7%). The manager barely traded, adding only one new US software stock and selling a lagging food brand. Annual fees are under 1.1%, and turnover is near zero—meaning low costs and tax efficiency. For ordinary investors, it shows that a low-cost, patient fund can beat the market. Worth reading because it demonstrates a simple, disciplined strategy: own great companies, hold them, and let compounding do the work.
Fundsmith Equity Fund returned 13.4% in the first half of 2017, outperforming the MSCI World's 5.3% by approximately 8 percentage points. During the period, it established a new position in Intuit (a US online accounting service provider) and did not fully exit any positions. Major buys included Nov
Fund vs. Benchmark (First Half 2017 and Annualized Since Inception)
| Indicator | Fundsmith Equity Fund | MSCI World | FTSE 100 |
|---|---|---|---|
| First Half 2017 Return | 13.4% | 5.3% | 4.7% |
| Annualized Return Since Inception | 20.0% | 12.7% | 8.0% |
Note: Since fund inception through June 30, 2017. Source: Manager commentary table.
Major Buys (Top 5 by amount, in GBP): Novo Nordisk (250,633,332), Intuit (109,941,712), Automatic Data Processing (99,973,922), Waters (93,003,605), Intertek (65,919,040).
Major Sells: JM Smucker (140,182,067), Reckitt Benckiser (18,679,638).
Manager commentary notes: No positions fully exited during the period. New position opened in Intuit (US online accounting service provider).
| Item | Value |
|---|---|
| Total Fund Size (as of 2017.06.30) | Approximately £11.326 billion |
| Ongoing Charge for Representative Share Class (T Class Acc) | 1.05% |
| Ongoing Charge for Lowest Share Class (I Class Acc) | 0.95% |
| Portfolio Turnover Rate (Semi-Annual) | -0.44% (Negative value due to net inflows and low trading) |
| Semi-Annual Dividend (T Class Acc, per share) | 1.76 pence |
1. Performance Comparison: The fund outperformed the MSCI World by approximately 8 percentage points in the first half (13.4% for the fund vs. 5.3% for the benchmark), and outperformed the FTSE 100 by an even wider margin.
2. Top Contributors: CR Bard (+1.59%), IDEXX Laboratories (+1.38%), Amadeus IT (+1.29%), Waters (+1.13%), PayPal (+1.11%). CR Bard was acquired by Becton Dickinson, also a portfolio holding; the fund will transition to holding Becton Dickinson shares.
3. Top Detractors: JM Smucker (-0.28%), Automatic Data Processing (-0.20%), Dr Pepper Snapple (-0.15%), Intuit (-0.02%), Colgate Palmolive (+0.08%). Smucker's acquisition of Big Heart Pet Brands did not meet expectations.
4. Portfolio Changes: No positions were fully exited. New position opened in Intuit (complementary to existing holding Sage).
5. Fees and Costs: T Class ongoing charge 1.05%, voluntary trading costs only 0.003% of fund average, total costs (including trading) 1.06%. The report emphasizes the cost advantage of low turnover.