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 Sustainable Equity I

A concentrated portfolio of global stocks that are viewed as sustainable by the manager.

  • 136.01p
    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.

  • 137.34p
    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).

  • 1.05%
    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.

  • 0.40%
    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 17 February 2020, fund data last updated 19 December 2019

The fund’s objective is to achieve long-term growth by investing in a concentrated portfolio of global equities. Manager Terry Smith’s approach is to be a long-term investor in his chosen stocks and he will not adopt short-term trading strategies. He invests in "quality" companies, defined as those able to sustain high rates of return on capital and that pass Fundsmith’s sustainable screening process. The portfolio has a high degree of commonality with the Fundsmith Equity fund.

Fund summary

Sector Global
Structure OEIC
Launched November, 2017
Size £316m
Yield 0.40%
Charging basis Income
Dividends paid Feb & 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 1.05%

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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. The fund will not invest in the following sectors: Aerospace and Defence, Metals and Mining, Brewers, Distillers and Vintners, Oil, Gas and Consumable Fuels, Casinos and Gaming, Pornography, Gas and Electric Utilities, Tobacco. They are screened out. The fund is unconstrained, will typically include between 20-30 companies.

Fund manager Terry Smith has enjoyed a long and successful career in finance. This fund seeks to tap into the demand for sustainable investing and we would describe the approach as mid green. Historically Smith’s approach has beaten the market over time on the Fundsmith Equity fund, whilst also providing low volatility returns and a degree of protection in falling markets. Performance on this fund since launch has broadly been in line with Fundsmith Equity, which is not that surprising given the small number of stock differences. Given the quality growth style future returns could be susceptible to rising interest rates.

Manager research

Average monthly relative returns

  • 15/16 1.03%
  • 16/17 0.72%
  • 17/18 0.06%
  • 18/19 0.49%
  • 19/20 0.43%

Bestinvest MRI

  • 3 years 0.33%
  • 5 years 0.55%
  • Career 0.42%
  • 3 years 92.40%
  • 5 years 99.80%
  • Career 99.80%

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 8.8 years experience of managing mutual funds in this sector. Over this period the average monthly return relative to the benchmark index has been +0.42%. 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 9%. 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 -9.00% (August 2018 - December 2018)
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 29 November 2019

%Microsoft Corp
%Amadeus It Group Sa
%Visa Inc
%Novo-Nordisk As
%Marriott
%Mccormick & Co Inc
%Kone Corp Ord
%Reckitt Benckiser Group Plc
%Coloplast
%Automatic Data Processing Inc
Source: Trustnet

Sector breakdown

Technology 30.00%
Consumer Staples 28.00%
Health Care 27.00%
Industrials 8.00%
Consumer Discretionary 4.00%
Money Market 2.00%

Portfolio

20-30 stocks. Developed market focus.

Constraints

The fund will not invest in the following sectors: Aerospace and Defence, Metals and Mining, Brewers, Distillers and Vintners, Oil, Gas and Consumable Fuels, Casinos and Gaming, Pornography, Gas and Electric Utilities, Tobacco

Key Investor Information - Income

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Key Investor Information - Accumulation

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