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 report covers Fundsmith Equity Fund's 2020 performance, up 18.3% vs 12.3% for global stocks. Manager Terry Smith sticks to high-quality companies with strong returns on capital (ROCE 25%, vs S&P 500's 11%) and very low turnover (4.1%). For ordinary investors, it shows the power of buying great businesses and holding them long-term, while keeping costs low (total cost 1.09%). Worth reading because Fundsmith has delivered 449% since launch, proving that patient, quality-focused investing works.
In 2020, the fund returned +18.3%, outperforming the MSCI World Index benchmark of +12.3%. PayPal contributed the most, with a single stock driving performance by +5.1%. The manager noted that the portfolio's weighted average free cash flow yield declined from 3.4% at the start of the year to 2.8% a
| Share Class | Reporting Period (2020) | Annualized (Since Inception) | Cumulative (Since Inception) |
|---|---|---|---|
| T Class Acc | +18.3% | +18.2% | +449.3% |
| MSCI World Index (Benchmark) | +12.3% | +11.9% | +214.8% |
The report did not provide a complete list of the top ten holdings, only disclosing the top five contributors and bottom five detractors to performance.
Top Five Contributors to Performance (2020)
| Rank | Company | Contribution |
|---|---|---|
| 1 | PayPal | +5.1% |
| 2 | IDEXX | +3.1% |
| 3 | Microsoft | +2.8% |
| 4 | Intuit | +1.5% |
| 5 | +1.4% |
Top Five Detractors from Performance (2020)
| Rank | Company | Detraction |
|---|---|---|
| 1 | Amadeus | -1.1% |
| 2 | Sage | -0.6% |
| 3 | InterContinental Hotels | -0.6% |
| 4 | Becton Dickinson | -0.4% |
| 5 | Philip Morris | -0.2% |
New Positions
Liquidated Positions
Significant Increases/Decreases
| Item | T Class Acc | I Class Acc | R Class Acc |
|---|---|---|---|
| OCF (Ongoing Charges Figure) | 1.06% | 0.96% | 1.56% |
| Direct Transaction Costs | 0.03% | 0.03% | 0.03% |
| Total Cost (TCI) | 1.09% | Not Disclosed | Not Disclosed |
| Total Fund Size (AUM) | £23,248,534,073 (All share classes combined) | — | — |
| Turnover Rate | 4.1% | — | — |
| Dividend (T Class Acc) | 1.78p per share | — | — |