£62 million windfall for fund star Smith

£37m BONANZA FOR WOODFORD DIRECTORS

FUND manager Terry Smith has pocketed up to £62.4m – making him one of global finance’s top earners.

This staggering sum is more than the pay of any FTSE100 chief executive and far better than most of the 65-year-old’s industry rivals.

Smith – who lives and works on Mauritius (pictured above) – earned the windfall in the year to March 2018 amid huge demand from savers lured by his strong performance.

Smith’s flagship equity fund is one of the best performers on the market with £15.8bn of assets under management.

It climbed 7.3pc in the year covered by the accounts, compared to an increase of only 2.6pc for a typical rival.

The fund would have turned an investment of £10,000 when it launched in 2010 into more than £38,000 today.

In October his company launched another investment opportunity for savers, a trust called Smithson, which raised a record £822.5m.

Russ Mould, of trading firm AJ Bell, said: ‘Investors love Terry Smith because over the long term his record is very, very good.

‘Patient investors willing to put their money with him have got their From Thursday’s Daily Mail rewards.’ The fund manager’s company Fundsmith LLP turned over £122.8m in the financial year to March 2018, according to its latest accounts, up 50pc on a year earlier. Profits of £20.9m were split between the firm’s owners, with boxing enthusiast Smith making £12m or a 57pc share as the highest-paid member of the business.

Another £88.4m was paid in fees to a Mauritius-registered company, Fundsmith Investment Services Ltd (FISL), with the same ownership structure as the British business. A proportion of this will have gone to members as profit with Smith taking as much as 57pc or £50.4m, giving him a total payout as high as £62.4m.

However, not all of the FISL money would have gone to Smith and his business partners in pay.

Fundsmith would not say how much of the FISL fees were given out as profit, but insisted some of the cash was spent on services such as research, administration and accounting. A spokesman said: ‘The payment made by Fundsmith LLP to FISL covers a significant number of costs, therefore it is disingenuous to assume gross fees are profit.’ Smith has a long-standing reputation as a maverick. The son of an East London lorry driver, he made his name in the 1980s as a banking analyst before lurching into controversy when at broker BZW where he urged investors to sell shares in its parent company Barclays.

He wrote a best-selling book in the 1990s on dirty accounting tricks used to make struggling firms look successful. Smith’s employer, Swiss investment bank UBS, fired him when he refused to withdraw it from sale.

The Brexit-backing father-oftwo took charge of stockbroker Collins Stewart, leading it through a mega merger that created markets giant Tullett Prebon.

He left for the Indian island of Mauritius in 2017 after finding the noise and grind of the City too distracting.

Smith’s bonanza will spark fresh debate about the huge pay of top fund managers.

It comes days after revelations that rival Neil Woodford had shared in a £36.5m dividend, despite suffering a woeful period of performance.

The money was paid to a company called Woodford Capital, in which Woodford has a 65pc stake and the company’s chief executive Craig Newman has 35pc.

This cash will be used to pay the pair’s salaries, with the rest either spent on charitable donations or reinvested. Woodford was in line for up to £23.7m.