Former Collins Stewart boss Terry Smith has launched a new asset management company that he says will offer low-cost and high conviction offerings to the market.
Fundsmith launches its first equity fund today with Smith himself investing £25m of his own assets in the fund. The equity fund, which Smith will manage, has a 1 per cent AMC if brought direct and a similar TER as costs will be kept low. The fund will hold a concentrated portfolio of 20-30 stocks which will be held for the long term.
Fundsmith has no performance or initial fees. Minimum investment is set at £1,000 for the retail share class.
Smith has slammed the fund management industry, claiming that the model is broken.
He says: “The vast majority of fund investors suffer from punitive fee structures, overtrading, fund proliferation, closet indexing, and over-diversification. The net result is poor performance.
“We will not market time, hedge, trade, short, invest in sectors we don’t understand or panic when markets fall. We will only invest in companies that have attractive valuations, high barriers to entry and are extremely resilient. We like companies with a business advantage that is hard to replicate and which are resilient to change, particularly to technological change.”
Smith has worked in financial services for the past 36 years. He joined Collins Stewart in 2000 and subsequently bought control of it and floated the firm in 2004. He is currently chief executive of Tullett Prebon.