fund
This is one of our rated funds. They’re the ones our experts believe will do well for investors over the longer term. Top of the class!
Fundsmith Equity I
A concentrated, unconstrained portfolio of global equities, held for the long term.
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463.38p
Price (Inc)
These are the shares in the fund that pay out an income to clients. The income is made up of the total dividends – the money a company can pay out to its investors – from the companies in the fund.
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511.26p
Price (Acc)
These are the shares in the fund that don’t pay out an income to clients. Any dividends – the money a company can pay out to its investors – are reinvested into companies in the fund. Despite no income, the shares should be worth more over time. Good incentive, eh?
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0.00%
Initial chargeSome funds charge you when you first invest, which is aptly known as the initial charge. They’re usually between 3-5% but at Bestinvest, we usually don’t charge you a penny!
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0.90%
Annual management charge
This is how much the fund management company charges to run the fund. It’s like paying a babysitter, dog sitter or house sitter (that makes well-informed, heavily researched changes to improve your baby/dog/house when needed).
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0.95%
Ongoing charges
This stands for Ongoing Charges Figure. It’s the cost of running a fund and includes admin fees, manager fees, administration costs, etc.
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0.60%
Yield
How much the fund is currently paying out in income to investors. It’s NOT to be confused with the overall growth of a fund – a very different thing indeed. It’s also NOT a guarantee of future pay-outs, just a snapshot. This is more what it’s not than what it is…
The fund targets long term growth by investing in developed world equities. Manager Terry Smith invests in a concentrated portfolio of large, liquid stocks, then holds them for the long term - this is a buy-and-hold strategy. He invests in "quality" companies, defined as those able to sustain high rates of return on capital, in cash, often through intangible assets such as brands that deter competition. These are typically found in Europe, UK and North America and often in the consumer staples sector.
Fund summary
| Sector | Global |
| Structure | OEIC |
| Launched | November, 2010 |
| Size | £20,122m |
| Yield | 0.60% |
| Charging basis | Income |
| Dividends paid | 28 Feb, 31 Aug |
Charges
| Standard initial charge | 0.00% |
| Initial charge via Bestinvest | 0.00% |
| Additional bid/offer spread | 0.00% |
| Annual management charge | 0.90% |
| Ongoing charges figure | 0.95% |
Allocation
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Investment process
Ideas are sourced through quantitative screening, monitoring corporate actions for new companies, and by reading annual reports. Portfolio companies must meet strict investment criteria: high quality businesses that can sustain a high return on operating capital employed; businesses whose advantages are difficult to replicate; businesses which do not require significant leverage to generate returns; businesses with a high degree of certainty of growth from reinvestment of their cash flows at high rates of return; businesses that are resilient to change, particularly technological innovation; businesses whose valuation is considered to be attractive. These criteria typically lead the fund to have a bias to consumer staples, IT, Industrials and healthcare with little or no exposure to financials and commodity companies. The fund is unconstrained, will typically include between 20-30 companies and may be susceptible to rising interest rates given its quality growth bias.
Fund manager Terry Smith has enjoyed a long and successful career in finance, notably upsetting the City establishment with his book "Accounting for Growth", published in 1992. He has strong views on the fund management industry and has put these into practice in the Fundsmith Equity fund and in a previous company's pension fund. Historically this approach has beaten the market over time, whilst also providing low volatility returns and a degree of protection in falling markets.
Manager research
Average monthly relative returns
- 15/16 1.26%
- 16/17 0.19%
- 17/18 0.40%
- 18/19 0.59%
- 19/20 0.24%
Bestinvest MRI
- 3 years 0.41%
- 5 years 0.54%
- Career 0.43%
- 3 years 95.10%
- 5 years 99.70%
- Career 99.90%
Performance figures are based on the average of monthly percentage returns relative to the benchmark index.
Terry Smith
Smith graduated in History from University College Cardiff in 1974. He worked for Barclays Bank from 1974-83. He obtained an MBA at The Management College, Henley in 1979. He became a stockbroker with W Greenwell & Co in 1984 and was the top-rated bank analyst in London from 1984-89. In 1990 he became head of UK Company Research at UBS Phillips & Drew, a position from which he was dismissed in 1992 following the publication of his book Accounting for Growth. He joined Collins Stewart shortly after, becoming a director in 1996. In 2000 he became chief executive and led the management buy-out of Collins Stewart, which was floated on the London Stock Exchange five months later. Collins Stewart acquired Tullett Liberty in 2003 and Prebon Group in 2004, creating the world's second largest inter-dealer broker. Collins Stewart and Tullett Prebon were demerged in 2006. In 2010 he founded Fundsmith where he is CEO and CIO.
Track record
Terry Smith has 9.6 years experience of managing mutual funds in this sector. Over this period the average monthly return relative to the benchmark index has been +0.43%. During the worst period of relative performance (from December 2010 - February 2011) there was a decline of 7% relative to the index. The worst absolute loss has been 11%. Statistically, we estimate the probability that this fund manager is adding value, rather than being lucky, is more than 99%.
Periods of worst performance
| Absolute | -11.00% (July 2019 - March 2020) |
| Relative | -7.00% (December 2010 - February 2011) |
About the MRI
Our unique indicator: the Bestinvest Manager Record Index (MRI) measures the likelihood that the fund manager is adding value through their decisions. It is based on their performance record over the course of their career, adjusted for the amount of risk taken. MRI is an important contributor to our fund rating system but it is also vital to take account of qualitative factors. It is also very important to select funds to form a cohesive portfolio with an appropriate overall risk level.
Allocation
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Top 10 holdings
Data accurate as at 28 February 2020
| %Microsoft Corp |
| %Philip Morris International Inc |
| %Paypal Hldgs Inc |
| %Novo-Nordisk As |
| %Facebook Inc |
| %Estee Lauder Companies Inc |
| %Intuit Inc |
| %Stryker Corp |
| %Pepsico Inc |
| %Idexx Laboratories Inc |
| Source: Trustnet |
Sector breakdown
| Consumer Staples | 32.00% |
| Technology | 30.00% |
| Health Care | 25.00% |
| Industrials | 5.00% |
| Communications | 4.00% |
| Consumer Discretionary | 3.00% |
| Money Market | 1.00% |
Portfolio
20-30 stocks.
Constraints
There are no formal constraints and the portfolio may be concentrated in certain sectors or countries.