Looking at the holdings of top-performing investment funds such as Fundsmith Equity can be an excellent source of investment ideas. In Fundsmith’s case, however, finding the full list of holdings isn’t so straightforward.
For a start, the fund’s monthly factsheet only lists the top 10 holdings, as do websites such as Hargreaves Lansdown. Secondly, Fundsmith doesn’t release a full annual or semi-annual report for UK investors. So we can’t find the full holdings this way, in the same way we can with other popular funds, such as the Lindsell Train Global Equity fund.
That said, Fundsmith does release an annual and semi-annual report for the SICAV (Société d’investissement à Capital Variable) version of the fund, which is marketed to investors in Europe. And, in this report, it lists the full holdings of the fund.
With that in mind, here’s a look at the fund’s full holdings as at 30 June, according to the most recent SICAV semi-annual report.
Fundsmith’s full holdings at 30 June 2019
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You can find more information in relation to stock weightings in the SICAV half-year report.
* 3M has since been sold according to the fund’s most recent factsheet.
Takeaways
So, what are the takeaways from this list of stocks? Well, for starters, one observation is the fund is heavily biased towards three main sectors – consumer staples, technology, and healthcare.
Note that there are no financial companies (banks, insurers, asset managers), utility companies (gas, electricity, water businesses) or materials companies (oil & gas, mining) in the portfolio.
Clearly, portfolio manager Terry Smith, who’s very much a long-term investor, sees the best investment opportunities in these three sectors.
Secondly, many of the companies Smith has invested in look set to benefit from dominant long-term trends. For example, there are a number of stocks that should benefit from the world’s ageing population including healthcare specialist Coloplast and hotel group InterContinental Hotels.
Then there are stocks such as Diageo and Unilever that should benefit from rising wealth in emerging markets. There are also a number of stocks that look set to benefit as the world becomes increasingly digital, such as Microsoft, Paypal, and Sage. Overall, I see clear themes at play here.
Another key takeaway is that the fund is heavily biased towards the US. Looking at that list, there are more US equities in the portfolio than UK and European equities combined. That said, Fundsmith does own six UK stocks, all of which are in the FTSE 100.
Finally, throughout the portfolio, there’s a focus on ‘quality’. All of the companies in the Fundsmith portfolio have competitive advantages, are highly profitable, and have strong track records when it comes to generating shareholder wealth.
This is certainly something to keep in mind when you’re picking stocks for your own portfolio.
