My colleague Vincent was wondering about how is Fundsmith Equity Fund’s performance over this period.
So this is a returns update for a friend and co-worker.
I last review Fundsmith Equity Fund’s performance in Sep 2023, so that is almost 2 years ago. This is a fund that is pretty popularly sold by financial advisers, notably in an Investment Linked policy structure. I guess the main reason is good recent performance makes the product sell itself.
You can read more of the post here: My Review of Fundsmith Equity Fund’s Performance
In the article, I compare the fund against what I think are the right comparables. Terry Smith has a quality + value and buy and make little adjustments philosophy and he has shown coherence to that philosophy over the years.
I won’t go too much into explaining quality, profitability, and value so this article is more of an update of the performance.
We will have:
- Full year 2023 and 2024
- First 4 months of 2025
Performances to update.
So here are the performances:
I think it is a bit small and I know some of you might not be able to click into it so let me split it up:
Perhaps some introduction is in order. I can benchmark and compare Fundsmith with a few factor indexes that systematically selects companies that exhibit quality characteristics such as low debt to equity, debt to assets, high return on equity, high return on assets, consistent earnings. There are also systematic indexes that selects companies that have higher profitability such as (operating earnings – interest expense) divide by book value, or 5-years of consistent dividend raises.
There are funds or ETFs that are available to you that you can invest in.
So here is what is presented:
- MSCI USA Sector Neutral Quality Index – IUQA via IBKR
- MSCI World Sector Neutral Quality Index – IWQU via IBKR
- GMO Quality Investment Fund – Fund via Endowus
- DFA US Hi Relative Profitability Index – Mutual Fund not available to Singaporeans
- Dimensional Global Large Cap High Profitability Index – Research Index not available.
- WisdomTree US Quality Dividend Growth UCITS ETF – DGRA via IBKR
- WisdomTree Global Quality Dividend Growth UCITS ETF – GGRA via IBKR
Out of all this, GGRA is in Daedalus Income Fund as a strategic holding. A Note is that we don’t have the April 2025 data for GMO Quality Investment Fund so we don’t have any performance for the fund in 2025.
We have about 6 full years of calendar years so we can see the cumulative and annualized returns. Fundsmith Equity Fund returns are in GBP, so I did some currency conversion.
Usually, if we use a quality and profitability screen to select stocks, you end up with healthcare, consumer staples and information technology dominant allocation. The price earnings of the overall portfolio tends to be high as well.
And in the past year the performance of healthcare and information technology have been the opposite. Performance in US is also better than International.
Those funds with better performance tend to be less healthcare, more information technology, more US focus.
But as you can see, those with international exposure, the global funds did better in the first four months of the year.
I think Vincent would be interested in the corresponding performance of the Dimensional Global Core Equity and the MSCI World Index for the period, so I presented this below:
I have also added the Dimensional US High Profitability ETF (DUHP) to the mix. DUHP is a US-listed ETF by Dimensional that systematically curates the companies that exhibit higher profitability. It did not have such a long history but I thought its good to put it out here for readers to take note.
So of course you can get access to these funds:
- Dimensional Global Core Equity – Fund via Endowus
- MSCI World – SWDA via IBKR
- Dimensional US High Profitability ETF – DUHP via IBKR
The underlying message may be: If you have an investment philosophy that we should systematically invest in companies that exhibit higher quality characteristics, there are many options out there that are accessible to you.
If you want to trade these stocks I mentioned, you can open an account with Interactive Brokers. Interactive Brokers is the leading low-cost and efficient broker I use and trust to invest & trade my holdings in Singapore, the United States, London Stock Exchange and Hong Kong Stock Exchange. They allow you to trade stocks, ETFs, options, futures, forex, bonds and funds worldwide from a single integrated account.
You can read more about my thoughts about Interactive Brokers in this Interactive Brokers Deep Dive Series, starting with how to create & fund your Interactive Brokers account easily.
Kyith is the Owner and Sole Writer behind Investment Moats. Readers tune in to Investment Moats to learn and build stronger, firmer wealth foundations, how to have a Passive investment strategy, know more about investing in REITs and the nuts and bolts of Active Investing.
Readers also follow Kyith to learn how to plan well for Financial Security and Financial Independence.
Kyith worked as an IT operations engineer from 2004 to 2019. Currently, he works as a Senior Solutions Specialist in Insurance Start-up Havend. All opinions on Investment Moats are his own and does not represent the views of Providend.
You can view Kyith's current portfolio here, which uses his Free Google Stock Portfolio Tracker.
His investment broker of choice is Interactive Brokers, which allows him to invest in securities from different exchanges all over the world, at very low commission rates, without custodian fees, near spot currency rates.
You can read more about Kyith here.
