Last Updated on Friday, 30 July, 2021 at 3:48 pm by Andre Camilleri
Fundsmith Chief Executive and CIO Terry Smith addressed the latest medirectalk organised by MeDirect Bank Malta which was held online.
Fundsmith is an equity fund focused on delivering superior investment performance at a reasonable cost. The rigorous research process of Fundsmith is central to its operation. The fund-house applies exacting standards to potential investments to produce a portfolio of resilient businesses with excellent performance.
Opening the webinar, Terry Smith provided an overview of the performance of the Fundsmith Equity Fund over the past six months, which registered a growth of 13.1%. Focusing on the companies that contributed to this positive trend, he attributed the growth mainly to the efficiency which resulted from increased investment in technology and transformation of digital businesses – namely online payments, digital marketing and operating systems.
Smith proceeded to explain the fund’s overarching investment strategy which relies on the principle of investing only in good companies. He argued that past profitability of good companies is generally a good indicator of future performance, as good companies do not become bad companies overnight and vice-versa. This was illustrated by Smith, by showing data spanning over six decades.
Addressing the common concern whether tech companies, which in this particular case constituted a third of the Fundsmith investment portfolio, were over-valued, Smith argued that these were well balanced out with a number of non-tech companies which complemented them, from a wide spread of sectors.
Speaking about Environmental, Social, and Governance (ESG), he said that according to academic research 75 per cent of ESG portfolio outperformance is due to quality factors. Underlining the fact that ESG alone is not enough, Smith said that no one needs a company which is superbly compliant on every aspect of ESG, but which will disappear in the long term. He said that companies also require conventional wisdom and sound management in order to achieve outperformance.
Fundsmith Chief Executive and CIO Terry Smith graduated in History from University College Cardiff in 1974. He worked for Barclays Bank from 1974-83 and became an Associate of the Chartered Institute of Bankers in 1976. He obtained an MBA at The Management College, Henley in 1979. He became a stockbroker with W Greenwell & Co in 1984 and was the top-rated bank analyst in London from 1984-89. In 2010 he founded Fundsmith where he is CEO and CIO.
In order to view the latest medirectalk session, as well as the past events visit https://www.medirect.com.mt/invest/medirectalk.
