Investors ‘begin to drop’ star stock picker Terry Smith as £360m flows out of UK’s largest fund
Nearly £360m was pulled from the UK’s largest investment vehicle during the first three months of this year, putting the spotlight on the performance of City stock picker Terry Smith.
Investors pulled roughly £360m from Fundsmith Equity Fund, which has an estimated £24.4bn in assets, according to Morningstar Data and reported by Wealth Manager.
The outflow is only the second continued spell of redemptions since the vehicle was launched in 2010, but it does mark the third consecutive month of net outflows, which may be “mark the beginning of a long-term shift,” according to WM, adding that “clients begin to drop Terry Smith.”
Last year, the Fundsmith Equity Fund, which is heavily backed by retail investors, faced record withdrawals of £460m during a March selloff.
“The [latest] redemptions coincide with a recent rotation from growth stocks, which have charged a decade of returns at the company, into value equities, and a period of relatively poor performance by Terry Smith,” WM wrote.
Morningstar data that Fundsmith Equity Fund also suffered a net outflow of £27m during April were reportedly disputed by the vehicle, saying it recorded a net inflow of £127m last month.
Nevertheless, in the last year, the vehicle reportedly booked returns of 21.7 per cent, compared to a global equity average of just over 42 per cent.
“With high-priced quality growth stocks such as PayPal and Microsoft dominant in his 29-stock portfolio, Smith missed out on the Covid recovery rally drive that propelled some rivals to the top of performance league charts,” WM concluded.