The UK’s most popular fund manager was paid £36.4 million ($43.7 million) as he entered a turbulent year that saw assets in his flagship fund go into decline.
(Bloomberg) — The UK’s most popular fund manager was paid £36.4 million ($43.7 million) as he entered a turbulent year that saw assets in his flagship fund go into decline.
Terry Smith, who manages Britain’s largest equity fund, was paid slightly more than the previous year, according to accounts for the 12 months through March 2022. Profit at Fundsmith LLP totaled £58.2 million, just above the £57.7 million reported for the prior year.
The accounts capture the beginning of a tough period for growth managers as the world adjusts to an era of higher interest rates and inflation. The Fundsmith Equity fund was up around 9% in the year that ended in March, despite a sharp fall in the first three months of 2022. The fund ended up losing around 14% of its value in 2022, its first down year in more than a decade.
The performance and investor withdrawals left the fund now managing £22.9 billion, down from an all-time high of about £28.8 billion in December 2021, according to data complied by Bloomberg.
Fundsmith LLP’s figures don’t give the full picture of the group’s operations. The UK company, which manages funds in London, Delaware and Luxembourg, paid £251.7 million to Fundsmith Investment Services Ltd., which is based in the low-tax jurisdiction of Mauritius and is not required to file public accounts. In 2021 the payment was lower at £188 million. Smith, 69, is a resident of the island.
Many of Smith’s UK peers are facing similar headwinds. The Blue Whale Growth fund, managed by Peter Hargreaves’ protege Stephen Yiu, lost around 30% of its value last year, while Nick Train’s £5.5 billion Global Equity fund fared better and was down less than 5%.
Fundsmith Equity runs a concentrated strategy of around 30 stocks and has big positions in Microsoft Corp., Philip Morris International Inc. and L’Oreal SA. Despite its recent decline, the fund’s net asset value has risen more than 300% over the past decade.
Smith founded Fundsmith in 2010 after a career in the City of London that included leading interdealer broker Tullett Prebon. Last year the stockpicker announced plans to shut down a £350 million listed fund after its performance trailed his own expectations.
(Updates with with fund performance in third paragraph, fund holdings in seventh paragraph.)
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