Star stock picker sees pay cut – to £144 million
Mauritius-based Terry Smith takes home reduced windfall after his cash-strapped investors snub shares
STAR stock picker Terry smith has suffered a pay cut after a downturn in results for his Fundsmith investment vehicle – but he still took home more than £140m.
assets under management fell by 8pc to £36.4bn in the year to the end of march according to accounts filed at Companies House.
Fundsmith, best known for smith’s £ 22.3bn Fundsmith equity fund, said the decline was mainly a result of investors pulling their money out, as well as performance of the funds.
The results come amid evidence that many investors across the UK, squeezed by inflation pressures and attracted by rising interest rates elsewhere, are shunning equities. Fundsmith’s profits fell by 14pc to £50m while turnover fell 22pc to £279m.
Under the firm’s partnership structure its highest-paid member, smith, was paid £31m, down from £36m a year earlier.
The company was also charged £186m in feed by mauritius-based Fundsmith investment services (Fis), down from £252m a year earlier. smith, who is thought to own 61pc of Fis, could be entitled to £113m of that.
That would leave him with a £144m haul, down from the previous year’s £190m.
Fundsmith declined to comment on the calculation.
smith, 70, originally from London but based in mauritius, is Britain’s best-known stock picker. His pay far exceeded that of UKlisted fund group bosses, with sir nigel Wilson, chief executive of Legal & general, taking home £4m last year, and peter Harrison, chief executive of schroders, receiving £4.7m.
His style of investing in growth stocks came under intense pressure at the end of last year owing to rising interest rates pushing down company valuations – particularly among tech stocks – in which the fund was invested.
The fund’s other top holdings include microsoft, L’Oreal, and luxury goods company LVmH.
smith’s style is to invest in a small number of ‘ high quality, resilient, global growth companies’, that he aims to hold over the long term.
He has become known for his outspoken views on companies such as consumer goods giant Unilever, which he accused of ‘ludicrous virtue signalling’.
smith famously once declared that ‘a company which feels it has to define the purpose of Hellmann’s mayonnaise has in our view clearly lost the plot’. more recently he revealed why he was dumping shares in Us online retail behemoth amazon after just two years. He said that was down to a concern over ‘potential capital misallocation’ after chief executive andy Jassy signalled his intention to expand its grocery retail business.
amazon had ‘already stubbed its toe’ in the sector when it bought the Whole Foods chain, he added, in a letter to investors in July. elsewhere in the letter, smith implied that he had been vindicated after holding onto shares in meta – the owner of Facebook, instagram and Whatsapp – after they slumped in 2022 but were up by 70pc over the past year, but adding he was ‘too paranoid to ever declare victory’.
and he said that large tech companies had ‘become victims of their own success’ growing so large that they have become part of the wider economic cycle.
‘apple and alphabet will almost certainly have down years in 2023 but we expect a decent bounce in 2024,’ he added. smith acknowledged threats to the economic environment posed by interest rates, inflation and recession as well as the Ukraine war and tensions with China but said: ‘We do not invest on the basis of our predictions about macroeconomics and geopolitics.’