60-second briefing: Fundsmith Equity versus Fundsmith Sustainable Equity

Fundsmith Sustainable Equity’s comparative performance makes it a decent diversifier for Fundsmith Equity fans.

Funds and Investment Trusts August 30, 2019 by Andrew Pitts

Most Money Observer readers will be familiar with the table-topping exploits of Terry Smith’s global Fundsmith Equity fund, but perhaps less so with the sustainable version. Fundsmith Sustainable Equity got off to a comparatively slow start when it launched on 1 November 2017, but it has recently mirrored the performance of its much larger sister fund.

At £304 million, the sustainable fund is dwarfed by Fundsmith Equity’s gargantuan £19.05 billion, but since its launch Sustainable Equity has returned 31.6%, compared with Equity’s 32.8% (as at 6 August). Both funds are managed with the same unyielding underlying selection criteria.

However, the 24 stocks held in the sustainable version are not sourced from firms the factsheet describes as having “substantial interests” in sectors such as defence, gambling, mining, fossil fuels and tobacco.

It’s fair to say that Fundsmith’s investing tenets would exclude the mainstream equity fund from investing in many of these sectors, particularly capital-intensive sectors such as mining.

However, Fundsmith Sustainable Equity’s comparative performance makes it a decent diversifier for Fundsmith Equity fans – including investors who aren’t bothered about sustainability – particularly as it is 63 times smaller, and potentially more nimble, than its giant sister.

 

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Comments

Fundsmith Sustainable Equity Fund

This fund is available to institutional investors only not retail investors (minimum investment £5m). I would have thought that most Money Observer readers are the latter not the former so not quite sure who this article is aimed at.

Fundsmith Sustainable Equity Fund

If you buy via an investment platform then the minimum investment is much lower. e.g. AJ Bell YouInvest has a minimum of 1 share.

Available to retail investors

The fund is available to retail investors on retail platforms including Bestinvest and interactive investor (our parent company), so it seems reasonable to discuss it within the magazine.

Kind regards,

Kyle Caldwell, deputy editor of Money Observer.

Totally agree

Totally agree

Fundsmith

Agree with the comment above I am sure there are not many money observer readers with spare 5 million so rather a pointless article

From March 2020 retail investors can buy T Class shares

I received a letter from Fundsmith which announces "T Class" shares in this fund. If you invest through Fundsmith's own ISA/JISA plan, the minimum investment is £1000 lump sum or £100 per month.

But no past performance information!

I will probably switch some Equity ISA money into Sustainable, as an experiment at diversifying within Fundsmith and as a nod towards a more ethical investment approach. But when I looked for some performance stats, it said there is no data. Given the fund started in 2017, surely they could have included the charts for the I-Class, or am I missing something? I had to look here and in the Fundsmith I-Class letter to shareholders for 2018 for the data, which does look very promising.

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