Terry Smith bags £36m as Fundsmith profits rise

Terry Smith bags £36m as Fundsmith profits rise

Fund manager Terry Smith received £36m for the year to the end of March 2021 as profits at the Fundsmith business he founded rose to £58m.

Fundsmith is a limited liability partnership with nine partners. The latest accounts at Companies House indicated that the partnership was paid £50m of the fund house's profits, with the partner that has the largest entitlement, Smith, receiving £35.6m. 

The £57.6m profit compares with £48m for the previous year, of which £43m was distributed among the partners, who also include Julian Robins, Fundsmith’s long serving head of research, who has worked with Terry Smith at previous firms. 

Fundsmith’s turnover for the year was £279.2m, compared with £228m for the prior year. The company’s flagship product is the £28.5bn Fundsmith Equity fund, which Smith manages.

This fund has returned 22 per cent over the past year, compared with 17 per cent for the average fund in the IA Global sector in the same time period. 

The fund manager pursues the growth style of investing, an approach which has been generally successful in markets over the past decade, but which has been called into question by the present economic and monetary policy environment, which prompted many investors to shift capital into value funds.

That led to a period of outflows from Fundsmith Equity at the start of 2020, before the inflows returned, with Smith saying those who criticised him were like "deserting rats" on a "ship which refuses to sink".

The Companies House filing shows the company had 26 employees, and total staff costs of £16.9m in the year. Both of those numbers represent an increase on the previous year. 

Fundsmith also operates emerging markets and global smaller companies investment trusts, and a global sustainable investment fund. 

Terry Smith acts as chief investment officer of the firm.