Influential City figure Terry Smith has launched a low-cost asset management company, Fundsmith, to tackle the ‘expensive poor performing funds’ on the market.
The company will only offer one equity fund, the Fundsmith Equity Fund, which launches today.
Its portfolio contains 20-30 global growth companies, and has no benchmark or sector constraints, and no initial or performance fees.
It will have a flat 1 per cent annual management charge for direct investors.
Smith believes the fund management industry is ‘broken’ with the vast majority of investors suffering from punitive fee structures, overtrading, fund-proliferation, and over-diversification. ‘Fees create an enormous drag on performance,’ declares Smith. ‘Until now, such a quality global equity fund has rarely been available to retail investors, and never at this price.’
He will initially be investing £25 million of his own money and will use Fundsmith as his own main investment vehicle.
Smith will work alongside head of research Julian Robins, who he has worked with for almost 25 years.
The fund will not chase after ‘the latest fad’. Instead it will focus on investing in companies that have attractive valuations, high barriers to entry and are extremely resilient, and it will invest for the long term. Smith says although the strategy is simple, ‘it will involve rigorous analysis and iron discipline to deliver superior performance’.
The fund has a minimum investment of £1,000, and £100 per month for regular saving. It is domiciled onshore in the UK.
Smith is well known in the financial services industry, and was the number one rated investment analyst for the banking sector in the 1980s. He bought the stockbroker Collins Stewart in 2000 and subsequently floated it. He remains chief executive of Tullett Prebon, the firm that now owns Collins Stewart.
Fundsmith is authorised and regulated by the Financial Services Authority. More information on Fundsmith can be found at www.fundsmith.co.uk
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