Fundsmith Equity is one of the most popular investment funds in the UK. Currently, investors (one of whom is me) have a total of around £22bn invested in it.
Now that we’re halfway through the year, I thought it would be a good opportunity to look at how the global equity fund is performing in 2023. With that in mind, here are the latest performance figures.
Solid returns in 2023
Fundsmith’s most recent factsheet shows that for the first half of 2023, the fund returned 8.5%.
That’s a pretty good return, in my view.
To put that figure in perspective, here are some other performance figures for the first half of the year:
- iShares Core FTSE 100 UCITS ETF: 3.2% (this is a FTSE 100 tracker fund)
- iShares UK Equity Index Fund: 2.0% (a FTSE All-Share index tracker)
- MSCI World index: 8.9% (Fundsmith Equity’s benchmark)
So, Fundsmith comfortably beat the FTSE 100 index. It slightly underperformed its benchmark, however.
It’s worth noting that there are some funds that delivered higher returns in H1. One example here is Blue Whale Growth (which I’ve also invested in). It returned 15% for the half year, thanks to its exposure to chip stocks such as Nvidia and ASML.
I’m not complaining about an 8.5% return in half a year though. I’m happy with that.
What has driven the returns?
As for why Fundsmith has outperformed the FTSE 100 index by such a wide margin this year, a lot can be explained by the fund’s exposure to Big Tech stocks such as Microsoft, Apple, Alphabet, and Meta Platforms. All these stocks have performed really well this year (after poor performances last year). Facebook owner Meta, for example, has seen its share price more than double.
But it’s not just tech stocks that have boosted Fundsmith in 2023. Returns have also been fuelled by healthcare stocks Novo Nordisk, Stryker, and IDEXX Laboratories, and luxury goods stocks LVMH and L’Oreal, all of which have produced double-digit returns in 2023.
Is Fundsmith still a good buy?
Is it still a good investment going forward?
I believe so.
This is a fund with a very impressive track record, having returned approximately 14% over one year, 26% over three, and 63% over five (to the end of June).
And I really like the investment strategy, which is based around investing in high-quality businesses. In the past, this approach has produced attractive returns when the market has risen, while minimising losses when the market has declined.
Of course, Fundsmith is not a ‘magic bullet’ when it comes to generating wealth. This was illustrated last year, when it lost around 14% of its value.
So, it’s important to own other investments alongside the fund.
That’s what I do. While Fundsmith is a core holding for me, I also own other funds and plenty of individual stocks for diversification.
