Terry Smith invests £115m in his Fundsmith fund
Feted fund manager Terry Smith has made a new £115m investment of his own money into the £8.2bn Fundsmith Equity Fund, the “opened ended” fund he founded six years ago.
The cash injection – made from the sale of his stake in the broker Tullett Prebon, which he used to run – means Mr Smith now has £200m in Fundsmith funds.
His company also manages an investment trust, Fundsmith Emerging Equities Trust or “FEET”.
Traditionally, managers of “openended” funds have been more cagey than their counterparts who run investment trusts about disclosing the extent of their personal investments in the portfolios they manage.
In our Fund of the Week column (on Page 13 this week), Telegraph Money routinely asks managers whether they invest their own money in the funds they manage. Many confirm that they do, but they tend to be reluctant to state a specific figure.
Mr Smith said: “I find it astonishing that many fund managers do not have skin in the game in terms of a significant investment in the funds they run. I wouldn’t trust a fund manager who doesn’t, and I believe disclosure of this should be mandatory, as it is in the US.”
Canaccord Genuity, the stockbroker, tracks the personal investments made by boards and managers in the “closed-ended” investment trusts they run. There is no equivalent overview of open-ended fund managers’ holdings.
The most recent Canaccord report found that Lord Rothschild had £155m invested with RIT Capital Partners, the investment trust he chairs, and Christopher Mills, chief executive of North Atlantic Smallers, had £65m in the company.
The report criticised the “lack of conviction” by managers who do not personally invest.
However, Jason Hollands of Bestinvest, the fund shop, said openended managers should not be judged on the same terms as trusts. He said trusts’ stock market listing made it essential that managements’ stakes were disclosed.