Terry Smith: “The problem is most people don’t read the accounts”

Terry Smith, founder and chief executive of Fundsmith, has built the UK’s largest actively-managed fund via rigorous implementation of the simple mantra 'buy good companies, don’t overpay, do nothing'.
In this interview, Smith tells Mary McDougall how he analyses and selects companies, how the rise of software has folded into his investment thinking and what trends he thinks currently look most promising.
He also talks about the extent to which fund size is a challenge going forward, and what spurred him to buy Amazon (US:AMZN) this summer.
Fundsmith Equity Fund has delivered an annualised total return of 18.4 per cent since its inception in November 2010, compared with 12.8 per cent for its benchmark MSCI World Index. It had assets under management of £27.9bn on 30 November 2021.
Listen to our podcasts: www.investorsc...
Follow us on Twitter: / ichronicle
Follow us on Instagram: / investorschronicle

[@DimensionRIFT]

Just recently found out about Terry Smith and I am glad I did. He provides such clear direction and relatable investment advice that makes it easier for persons to understand companies and investments. Really enjoy listening to his advice and his investment principles are so simple and straightforward. More people need to hear about Terry Smith.

[@festerarl6653]

Superb interview. He talks so much common sense.

[@imclub6818]

Straight talking and no nonsense. Terry Smith was the one that inspired me to launch my fund.

[@lawolsten]

Where can I learn more about your fund?

[@bluegtturbo]

Which fund?

[@alexdoherty6810]

Terry is always great to listen to, and each time I hear him speak it makes me more confident holding Fundsmith Equity.

[@Chiefmismaker]

Absolutely right and very well said.

[@skipkapur1]

Terry is a fantastic investor. So glad I can learn from him, and even emulate his investments

[@Nuganics]

Im doing it also if you wish to compare

[@je7303]

Yeah !

[@andypicken7848]

Terrys opinions on tangible light business having high PE ratios was really insighfull. It brings to mind Nick Trains comments about what he considered to be the most important consideration when making a new position, that is "What will be the effect of advanced technology on the business"

[@3Unique]

As always interesting listening. Thank you Mr Smith and IC.

[@raymondgill9796]

I find Terry to be consistent and credible. He does a great job and when you include dealing costs he is excellent value. Others charge lower headline fees but then cost too much because of trading charges on too much churn. Overall I have been very happy that I found him to look after my money.

[@dznRefuse]

nice Interview but timestamps would double the value of this podcast

[@bluegtturbo]

She said 'now, 30 years later from 1992...so it must be around January 2022

[@trevorharvey105]

In Terry we trust

[@extramild1]

A very very sharp man.

[@georgeallen2480]

Amazing interview

[@johanneszwilling]

Yap, I like his reasonablility too! Though we still have to see how this fund weathers the storm of a major market correction.

[@Barkotina]

Why do all Terry Smith interviews have horrible sound?

[@Nuganics]

should like a phone call

[@bluegtturbo]

I'm afraid it's recent performance is nothing to write home about. But to be fair all stocks are being marked down in mid 2022

[@bighands69]

As long has his proformance can stay above water that is what counts. When a fund performs over a long period of that those down periods appear like nothing.

[@Julian_0595]

Great!

[@hansaemzivat5507]

Thx

[@guharup]

Mary, from her voice, appears to be on the edge

[@paulturner4419]

This guy could just be randomly lucky. Funds only been around since 2010

[@petercowley312]

The sound is probably poor because Terry is in Mauritius. His fund has not done particularly well recently, his charges don't reduce as the funds get bigger, and unlike JP Morgan and Baillie Gifford, they pay no dividends. The latest news is that he will bank a minimum £150 million this year.

[@Chiefmismaker]

And in the longer term investors have had circa 18% annual return at relatively comfortable risk levels (as far as equities go) with open explanation of what the manager does and why. Where is the problem?

[@matthewjefferys]

Fundsmith does pay dividends, admittedly not much however if you listen to his various interviews you will hear why there are no or little dividends, primarily because the companies he invests in generally do not pay dividends, preferring to reinvest their profits. This is a strategy he endorses. Investing is a long term game so any viewer reading this should make their own judgement by looking at his success rate over the last 5 & 10 years and see how Fundsmith stacks up. It is true that the charges appear high but again if you listen to his annual shareholder meetings you will hear him explain all about this. At the end of the day, it is personal taste, if you do not like it, do not invest.

[@rickfool1452]

@@matthewjefferys how much did he pay you to say this? thx for reminding us we don't have to invest. I was under the impression it's mandatory. enlightening.

[@bighands69]

@@rickfool1452 There is nothing in the world that is free no matter what people try to convince you off. Indexes have charges and in line with their average performances they make money of large scale wide investments. Fundsmith have an excellent return but also have good investment fundamentals and do not do fads. If you do not invest that is your own problem and not something to boast about.

[@SreeniMeka]

I wish they could have talked slow so non British folks like me could comprehend. Great investor but hard to understand.

[@danguee1]

He was doing a talk/interview for Investors' Chronicle - which is British based and has almost exclusively British customers. He wasn't doing it for youtube or an international audience

[@gordong2457]

Use closed captioning