- Popular fund exits Intuit and PayPal positions
- Fundsmith Equity lurches to first-ever annual loss
- But Nike boosts December performance
Terry Smith’s flagship Fundsmith Equity (B4Q5X52) fund has sold out of both Intuit (INTU:NASDAQ) and PayPal (PYPL:NASDAQ), according to the popular global fund’s December 2022 factsheet.
The latest literature also confirmed that 2022 saw the portfolio deliver its first annual negative return since its November 2010 launch, with a total return of -13.8% for the T class accumulation shares.
OUT GO INTUIT AND PAYPAL
During December Fundsmith Equity, the long-term global investor with £22.5 billion of assets at last count, sold Intuit, the small business accounting software firm whose shares are down almost 40% over one year.
Fundsmith Equity also exited its position in online payments platform PayPal, throwing in the towel following a 60%-plus share price slide over the past year.
However, last month’s top five contributors included Nike (NKE:NYSE), shares in the sportswear giant rallying after forecast-beating second quarter results (20 December), as well as cosmetics colossus Estee Lauder (EL:NYSE), Danish pharmaceutical company Novo Nordisk (NVO:NYSE), medical implants maker Stryker (SYK:NYSE) and tobacco titan Philip Morris (PM:NYSE).
The top five detractors to Fundsmith Equity’s performance were Automatic Data Processing (ADP:NASDAQ), Brown-Forman (BF.B:NYSE), Amazon (AMZN:NASDAQ), Alphabet (GOOGL:NASDAQ) and Diageo (DGE).
SHORT-TERM SETBACK
Terry Smith’s flagship fund is concentrated around a small number of high quality, resilient, global growth companies, with 27 holdings at last count.
The respected stock picker (pictured below) was forced to contend with choppy markets last year following Russia’s invasion of Ukraine as well as rising interest rates, which prompted more investor selling of quality growth companies and a widespread rotation towards lower quality value sectors.
Fundsmith Equity’s 13.8% loss for 2022 was worse than the 7.8% decline for global equities, as measured by the MSCI World Index and a positive 1.4% return from cash, though the decline was better than the 15% negative return from UK bonds.
And while Fundsmith Equity’s first annual loss is a short-term setback, investors should remember it follows 12 years of positive returns, with 2021’s impressive 22.1% total return building on gains of 18.3% in 2020 and 25.6% in 2019.
