Smart Money Profile

Terry Smith

Fundsmith

Primary Fund

£11.8B

Fund Size

Quality · Long-Term

Investment Style

Profile & Investment Philosophy

Terry Smith runs Fundsmith Equity, a £11.8 billion UK fund built on three rules: buy good companies, don't overpay, do nothing. Because Fundsmith is a UK manager, it files no SEC Form 13F - the holdings below come from the monthly factsheet dated 31 July 2026. The portfolio holds 28 names, led by Mastercard, Stryker, Waters, Amadeus and Visa, with 84% of the book listed in the US. Six names from the April top ten - Marriott, Alphabet, Meta, Philip Morris, IDEXX and ADP - no longer appear there after what Smith described as a number of portfolio changes in July. The fund is up 0.1% in 2026 against -0.9% for global equities.

Track Record

Terry Smith launched Fundsmith Equity Fund in November 2010 with three rules that have not changed: only invest in good companies, do not overpay, do nothing. The fund has compounded at roughly 15.3% annualised since inception, modestly ahead of the MSCI World Index over the same period and well ahead of the typical UK-domiciled global equity fund. Fundsmith manages tens of billions across the flagship strategy and runs an Emerging Equities Trust and a Sustainable Equity vehicle. Unlike US-based hedge funds, Fundsmith does not file 13Fs — positioning is disclosed through the monthly factsheet, the annual letter and the annual shareholder meeting, which has become one of the most-watched events in European long-only investing.

Signature Trades

Microsoft — buying the cloud pivot

Fundsmith built a meaningful Microsoft position relatively early in the Satya Nadella era, when the market still viewed the company as a legacy Windows business rather than a hyperscale cloud platform. The thesis combined classic Fundsmith criteria — high return on capital, sticky enterprise revenue, balance-sheet quality — with a recognition that the cloud transition was structurally widening the moat. The position has been a major contributor to the fund's performance through the 2020s.

PepsiCo and Diageo — branded-consumer compounders

PepsiCo and Diageo are textbook Fundsmith holdings: global brand portfolios, decades-long distribution moats, pricing power through inflation cycles and high incremental returns on reinvestment. Smith has held both names for years as anchor positions, treating them as the canonical examples of his good-company definition. The trade is less about timing than about owning quality businesses for long enough that compounding does the work.

Unilever — the rare exit (April 2026)

Smith exited Unilever in April 2026 — a notable move given his explicit preference for doing nothing. He had been publicly critical of management for years, most famously over the GSK consumer-health bid in 2022 and the broader concern that the company had become obsessed with brand purpose at the expense of operational execution. The exit reinforces a core Fundsmith principle: even good companies can lose their good-company status, and when the thesis breaks you sell — but you do not flip-flop along the way.

Current Strategy (2026)

Fundsmith holds 28 positions at 31 July 2026 — the upper end of Smith's preferred range of 20 to 30 names — with Mastercard at the top of the factsheet's top ten, followed by Stryker, Waters, Amadeus and Visa. July brought what Smith called a number of portfolio changes, and the effect is visible: Marriott, Alphabet, Meta, Philip Morris, IDEXX and ADP have dropped out of the top ten since April, while Mastercard, Amadeus, Microsoft, Yum! Brands, Uber and Church & Dwight moved in. The book remains tilted toward high-return-on-capital businesses in payments, medical technology, branded consumer and select software, with no exposure to banks, commodities, real estate or utilities — sectors Smith has long argued cannot meet the good-company test. 84% of the fund is listed in the US. Performance has been the flat spot: +0.1% in 2026 to end-July against -0.9% for global equities, with AppLovin, TSMC and Uber the month's largest detractors.

BMI

BMI Counter-Take

Terry Smith is the most disciplined application of quality investing available to the European retail investor — and we mean that as the highest compliment. The three rules are deceptively simple, but the discipline of actually applying them is what 99% of managers fail at. The valid critique is that Fundsmith has lagged the MSCI World in recent years as the index has narrowed around the Magnificent Seven, several of which Smith deemed too richly valued. If you believe quality compounds over a full cycle, that is a feature, not a bug. If you measure success in three-year rolling windows, you will be tempted to switch — and you will probably switch at exactly the wrong moment.

Current Portfolio

LATEST FACTSHEET 2026-07-31

Latest monthly fund factsheet — this manager files no SEC Form 13F. Total portfolio value: £11.8B. Holdings: 28 positions.

Security	Shares	Δ vs Prev	Value ($)	Portfolio %
Mastercard	—	—	—	—
Stryker	—	—	—	—
Waters	—	—	—	—
Amadeus	—	—	—	—
Visa	—	—	—	—
Microsoft	—	—	—	—
L'oréal	—	—	—	—
Yum! Brands	—	—	—	—
Uber	—	—	—	—
Church & Dwight	—	—	—	—

SOURCE: Fund factsheet (2026-07-31). BMI Smart Money Tracker.

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