Fundsmith 2020 Full Annual Letter To Shareholders

The eagerly anticipated annual letter to shareholders from Fundsmith has been released today, Wednesday 20 January 2021. Much like Warren Buffets annual letter has become compulsory reading for any aspirational investor, so too has Terry Smith writings. And it hasn’t disappointed. Smith has given his thoughts on the pandemic as well provided trends that have been accelerated as a result


Fundsmith produced another barnstorming year in 2020 delivering returns of 18.3% far outpacing the benchmark. Since inception roughly 10 years ago, the cumulative returns have been 449.3%! No wonder fundsmith is one of the only funds I invest in. 


Looking at the Fundsmith portfolio, it is no surprise the tech companies produced the best results with Paypal, Microsoft and Intuit leading the way. On the other hand, stocks linked to the travel industry such as Amadeus and InterContinental Hotels performed badly. 


During the year, the fund sold its stakes in Clorox and Reckitt Benckiser due to high ratings as compared to future growth. The fund also initiated three new positions in the fund, namely, Nike, Starbucks and LVMH. Feels like an active year for the fund considering its low turnover in previous years. You can find a full breakdown of Fundsmith holdings here.


The letter goes on to talk about intangible assets as well the trends have been accelerated by COVID. For example:

  • E-commerce
  • Online working from remote locations using the cloud or distributed computing
  • Home cooking and food delivery
  • Online schooling and medicine
  • Social media and communications
  • Pets — which have become more important in isolation and when their owners are at home more
  • Automation and AI


I’ll leave it as that for now and let you go over to the Fundmsith website to read the letter in full. it is definitely worth your time.