fund

Rated

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

  • 577.45p
    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.

  • 639.09p
    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?

  • 0.00%

    Initial charge

    Some 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!

  • 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).

  • 0.96%
    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.

  • 0.30%
    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…

Prices as at 22 October 2021, fund data last updated 27 November 2015

The fund targets long-term capital growth by investing in developed world equities. Well-known manager Terry Smith focuses on large-cap quality growth companies in the belief that they tend to outperform less efficient peers over many years. Smith’s target companies need to have strengths such as sustaining a high return on operating capital and business models which are hard to replicate. As such it is a very concentrated portfolio with typically around 30 names. Its holdings include tech titan Microsoft, cosmetics group Estee Lauder and Danish healthcare firm Novo Nordisk. The investment process combines quantitative screening and company research. It is essentially a ‘buy and hold’ strategy, with Smith looking to invest for the long-term and remaining patient during tough market periods.

Fund summary

Sector Global
Structure OEIC
Launched
Size £27,767m
Yield 0.30%
Charging basis Income
Dividends paid 28 Feb, 31 Aug

Charges

Standard initial charge 0.00%
Initial charge via Bestinvest 0.00%
Annual management charge 0.90%
Ongoing charges figure 0.96%

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Investment process

The fund has an investment universe of around 70 names. It is selective because Smith and his team seek those rare companies that can defy the laws of capitalism and sustain a high return on invested capital for many years. Smith invests in ‘good’ businesses whose advantages are difficult to replicate, do not require significant levels of debt to generate returns, are resilient to change thanks to technological innovation and that have an attractive valuation based on free cash flow yield. The target companies also need to be able to generate revenue through a high volume of everyday, repeatable, and predictable events. Smith typically avoids less developed countries and sectors including banks, real estate, and insurers. Stock deas are sourced through quantitative screening, and company research including Annual Reports & Accounts. The team also meet management, attend conferences, and read industry publications. The final part of the process is to simply sit back and do nothing. They allow the growth and return on capital which companies generate to compound over the long-term. They will only exit a position if they believe the investment case has weakened such as the company making, in their view, a risky acquisition.

Manager Terry Smith is highly experienced in the finance industry and in fund management, having run this fund since it was launched in 2010. He is supported by his long-term colleague Julian Robins who also has a formidable track record. The fund benefits from a strong investment philosophy focusing on quality and long-term absolute returns. Smith believes that the market consistently underestimates the long-term compounding power of high-quality companies and misprices them. He has proven extremely astute at identifying these companies and holding on to them to take advantage of their continued success. He has also been nimble in reducing sector exposure if new threats such as changing consumer patterns emerge. There are some concerns that Smith’s star manager status is a risk if he ever departed, though Fundsmith stresses the company is “structured to survive Smith’s demise”. The fund may also fare less well in value-led or cyclical markets. But overall Fundsmith Equity remains one of the strongest options and has delivered exceptional performance since launch.

Manager research

Average monthly relative returns

  • 16/17 0.00%
  • 17/18 0.00%
  • 18/19 0.00%
  • 19/20 0.00%
  • 20/21 0.00%

Bestinvest MRI

  • 3 years 0.00%
  • 5 years 0.00%
  • Career 0.00%
  • 3 years 0.00%
  • 5 years 0.00%
  • Career 0.00%

Performance figures are based on the average of monthly percentage returns relative to the benchmark index.

Track record

Periods of worst performance

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Relative 0.00% ()

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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Sector breakdown

Technology 28.00%
Consumer Staples 28.00%
Health Care 23.00%
Consumer Discretionary 10.00%
Communications 5.00%
Money Market 3.00%
Industrials 2.00%

Portfolio

20-30 stocks.

Key Investor Information - Income

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Key Investor Information - Accumulation

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