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Fundsmith: here’s a look at the full holdings

Looking at the holdings of top-performing investment funds such as Fundsmith Equity can be an excellent source of investment ideas. In Fundsmith’s case, however, finding the full list of holdings isn’t so straightforward.

For a start, the fund’s monthly factsheet only lists the top 10 holdings, as do websites such as Hargreaves Lansdown. Secondly, Fundsmith doesn’t release a full annual or semi-annual report for UK investors. So we can’t find the full holdings this way, in the same way we can with other popular funds, such as the Lindsell Train Global Equity fund.

That said, Fundsmith does release an annual and semi-annual report for the SICAV (Société d’investissement à Capital Variable) version of the fund, which is marketed to investors in Europe. And, in this report, it lists the full holdings of the fund.

With that in mind, here’s a look at the fund’s full holdings as at 30 June, according to the most recent SICAV semi-annual report.

Fundsmith’s full holdings at 30 June 2019

Fundsmith SICAV holdings
UK 
Diageo
InterContinental Hotels 
Intertek 
Reckitt Benckiser
Sage 
Unilever
 
Europe 
Coloplast
Novo Nordisk
Kone
L’Oreal
Amadeus IT
 
US 
3M* 
Automatic Data Processing
Becton Dickinson and Co
Estee Lauder
Facebook
IDEXX Laboratories
Intuit
Johnson & Johnson
McCormick & Co
Microsoft Corp
Paypal Holdings
PepsiCo
Philip Morris International
Stryker Corp
Visa
Waters Corp

You can find more information in relation to stock weightings in the SICAV half-year report.

* 3M has since been sold according to the fund’s most recent factsheet.

Takeaways

So, what are the takeaways from this list of stocks? Well, for starters, one observation is the fund is heavily biased towards three main sectors – consumer staples, technology, and healthcare.

Note that there are no financial companies (banks, insurers, asset managers), utility companies (gas, electricity, water businesses) or materials companies (oil & gas, mining) in the portfolio.

Clearly, portfolio manager Terry Smith, who’s very much a long-term investor, sees the best investment opportunities in these three sectors.

Secondly, many of the companies Smith has invested in look set to benefit from dominant long-term trends. For example, there are a number of stocks that should benefit from the world’s ageing population including healthcare specialist Coloplast and hotel group InterContinental Hotels.

Then there are stocks such as Diageo and Unilever that should benefit from rising wealth in emerging markets. There are also a number of stocks that look set to benefit as the world becomes increasingly digital, such as Microsoft, Paypal, and Sage. Overall, I see clear themes at play here.

Another key takeaway is that the fund is heavily biased towards the US. Looking at that list, there are more US equities in the portfolio than UK and European equities combined. That said, Fundsmith does own six UK stocks, all of which are in the FTSE 100.

Finally, throughout the portfolio, there’s a focus on ‘quality’. All of the companies in the Fundsmith portfolio have competitive advantages, are highly profitable, and have strong track records when it comes to generating shareholder wealth.

This is certainly something to keep in mind when you’re picking stocks for your own portfolio.

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Edward Sheldon owns shares in Hargreaves Lansdown, Unilever, Diageo, Reckitt Benckiser, and Sage and has positions in the Fundsmith Equity fund and the Lindsell Train Global Equity fund. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK owns shares of and has recommended Microsoft, PayPal Holdings, and Unilever. The Motley Fool UK has recommended Diageo, Hargreaves Lansdown, InterContinental Hotels Group, and Sage Group and recommends the following options: long January 2021 $85 calls on Microsoft and short January 2020 $97 calls on PayPal Holdings. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.