The Fundsmith Equity Fund was launched almost two years ago by City veteran, Terry Smith. The Tullet Prebon chief vowed to provide a no-frills fund with a long-term outlook and, most importantly, low charges. By and large, he has made good on that promise.
Fundsmith has delivered a return in excess of 10 per cent despite the dismal economic conditions. This puts Mr Smith's fund at the top of its peers in the IMA Global sector over one year, with performance 3 per cent ahead of its nearest rival and way head of the sector average, which is a fall of 6 per cent.
Mr Smith's investment technique is fairly straightforward. He avoids over diversification and reduces portfolio turnover by investing in a concentrated portfolio of just 26 companies, which specialise in the provision of the basic necessities - from toilet paper to pet food.
He looks globally for quality businesses that can sustain high returns on operating capital and which boast advantages that are difficult to replicate - the Warren Buffett 'competitive moat' idea. He also looks for companies which do not require significant leverage to generate returns and have a high degree of certainty of growth from reinvestment of their cash flows at high rates of return.
Leverage, shorting, hedging and derivatives are avoided altogether, and the manager will not hedge any currency exposure. Fundsmith is also the main vehicle for Mr Smith's own investments, giving him an extra incentive to perform.
| FUNDSMITH EQUITY FUND T ACC | |||
| PRICE | 126.23p | SHARPE RATIO | 0.58 |
| IMA SECTOR | Global Growth | 1 YEAR PERFORMANCE | 10.92% |
| FUND TYPE | Oeic | 6 MONTH PERFORMANCE | 9.82% |
| FUND SIZE | £453m | 3 MONTH PERFORMANCE | 3.31% |
| No OF HOLDINGS | 26 | TOTAL EXPENSE RATIO | 1.20% |
| SET UP DATE | 01-Nov-10 | MINIMUM INVESTMENT | £1,000 initial, £100 thereafter |
| MANAGER START DATE | Nov-10 | MORE DETAILS | fundsmith.co.uk |
Source: Investors Chronicle funds data, *FundSmith
Performance figures as at 9 July 2012.
Top ten holdings (as at July 2012)
| Company |
| Unilever |
| L'Oreal |
| Dr Pepper Snapple |
| Microsoft |
| Procter & Gamble |
| Pepsico |
| Automatic Data Processing |
| Stryker |
| Serco |
| Reckitt Benckiser |
Sector Breakdown
| Sector | Percentage |
| Consumer Staples | 49.0 |
| Healthcare | 16.0 |
| Industrials | 15.0 |
| Technology | 11.0 |
| Consumer Discretionary | 5.00 |
| Materials | 3.00 |
| Cash | 1.00 |
Geographical Breakdown
| Country | Percentage |
| UK | 29.00 |
| Continental Europe | 15.00 |
| US | 56.00 |
