How Terry Smith invests his personal fortune

Terry Smith’s stock- picking prowess has attracted billions of pounds to his Fundsmith Equity fund – and the companies that the star fund manager is backing with his personal fortune share a similar pedigree.

Nearly £90m of Mr Smith’s personal wealth is invested in the shares of 29 American companies, most of which have dramatically outperformed the broader stock market.

They include stocks not held within Fundsmith’s funds, such as ServiceNow, a workplace software provider that has soared 660pc over the past five years, and Adobe, another software company, whose shares have risen 490pc over the same period.

Shares in Synopsys, a silicon chip designer, and Autodesk, a business software provider, are both also owned by Smith and have returned 380pc over the past five years.

Filings to the American financial regulator have revealed Mr Smith’s personal holdings, valued at £88m and held in a Cayman Islands hedge fund set up to manage his fortune.

The fund, not run by Mr Smith himself, has held the shares since at least December last year. Over that period they have delivered returns marginally ahead of the S&P 500, a barometer for the American stock market, but over the longer term performance has been more impressive.

On average the shares are up 88pc over three years and 226pc over five, ahead of 53pc and 109pc for the index.

Of the 29 stocks, 13 are also held in either Smith’s Fundsmith Equity fund, Britain’s largest at £26bn, or the £ 2.9bn Smithson investment trust run by his business. They include some of Fundsmith Equity’s best-performing stocks, such as software provider Microsoft, whose shares are up 445pc over the past five years, and Intuit, which specialises in accountancy software.

While the remainder do not feature in Fundsmith’s funds, most operate in sectors that are among his favourite areas to invest. Medical stocks held in the private fund included Agilent Technologies, which makes laboratory instruments and whose shares have risen 214pc over the past five years, Danaher, up 246pc, and Icon, which has rallied 195pc.

Consumer goods businesses also feature, such as Sherwin-Williams, a paints company, O’Reilly Automotive, a car parts retailer, and Ross Stores, a chain of discount department stores.

The £88m investments represent only a fraction of Mr Smith’s wealth, amassed during his career in the City and as the founder of Fundsmith, which now manages more than £30bn and has paid him £83m over the past eight years.

Mr Smith has investments worth more than £250m in Fundsmith funds, with the majority held in Fundsmith Equity.

Most of the stocks held in Mr Smith’s private fund have beaten the market