Fund Snapshot
| Fund Name | Fundsmith Equity Fund |
| Inception Date | 1 November 2010 |
| Fund Size | £22.6 billion (as of 31 Jan 2023) |
| Benchmark | MSCI World Index (Net, GBP) |
| Fund Type | UK OEIC: £22.5bn Luxembourg SICAV: €8.0bn Delaware L.P.: $1.0bn Mauritian Feeder: $467.0m |
| Ideal Investment Horizon | Long-term |
| Investor Profile | Suitable for those seeking long-term capital growth via high-quality global equities with low turnover and disciplined valuation |
Investment Strategy
1. Only Invest in Good Companies
Fundsmith targets companies with:
- High cash-based ROCE (Return on Capital Employed)
- Growth driven by reinvestment of internal cash flows
- Strong competitive moats (brands, distribution, franchises)
- Predictable, repeat small-ticket transactions
- Low debt dependency
2. Don’t Overpay
Valuation is driven by:
- Free cash flow yield (current vs 4–5 year forecast)
- Relative attractiveness within the portfolio, wider universe, and market
- Comparison against bonds
As of 31 Dec 2022:
- Fund FCF Yield: 3.2%
- FTSE 100 (non-financials): 5.1%
- S&P 500 (non-financials): 3.4%
3. Do Nothing
- Ideal holding period: Forever
- Voluntary exits only when: fundamentals weaken, valuations become excessive, or better opportunities arise
- No panic-selling during market sell-offs
Fund Overview
The Fundsmith Equity Fund follows a straightforward, long-term investment philosophy built on three core principles:
- Only invest in good companies
- Don’t overpay
- Do nothing
The fund seeks to own high-quality businesses that generate high returns on operating capital employed, require little leverage, enjoy durable competitive advantages, and reinvest their cash flows efficiently. It avoids businesses vulnerable to disruption or heavy in cyclical exposure.
The fund does not market-time, hedge, short, or trade frequently, and maintains a highly concentrated portfolio of 20–30 stocks drawn from an investible universe of 80 companies.
