Fundsmith Equity Fund Holdings Reveal More Than the Top 10

The Fundsmith Equity Fund holdings disclosed in monthly factsheets show only the top 10 positions, but the first half of 2026 was a period active enough to make that partial picture genuinely misleading. Terry Smith’s semi-annual letter to shareholders reported portfolio turnover of 51.8% between January and June, with 12 new positions initiated and 13 exited or being exited. For a fund whose stated process ends with the instruction to “do nothing”, that is a lot of movement to absorb from a one-page factsheet.

The performance backdrop makes the activity harder to dismiss. The fund returned -2.9% in the first half of 2026, against a gain of +11.2% for global equities over the same period. Since inception on 1 November 2010, the fund has returned +592.6% cumulatively, equivalent to +13.1% annualised to 30 June 2026: a long record worth scrutinising, not discarding. But the gap in the first half was wide enough that Smith used the semi-annual letter to explain modifications to the “Do Nothing” leg of his investment process, describing the letter as lengthier than usual for that reason.

What Fundsmith Equity Fund Holdings Actually Reveal in the Long Reports

The monthly factsheet lists only the top 10 holdings and notes that positions still being built may be withheld until the intended weighting is reached. The Financial Conduct Authority (FCA) does not require a monthly factsheet at all; the top-10 convention is an industry practice, not a regulatory floor. The full portfolio appears in the annual and half-yearly long reports, which the FCA requires under the Investment Association’s Standard Rules of Practice. The catch is timing: annual reports can appear up to four months after year-end, half-yearly reports up to two months after the half-year. The latest complete picture can be nearly ten months old by the time the annual report deadline arrives.

Investors who go looking in the June 2026 factsheet will find the geographic split: 77.5% in US-listed stocks, with cash at 7.0% and the remainder spread across France (5.7%), Spain (4.8%), the UK (2.8%), and smaller positions in Sweden, the Netherlands, and Denmark. That concentration in US equities is the kind of fact that changes how you think about the portfolio’s sensitivity to dollar movements or a shift in US valuations. It does not appear in the top-10 list.

The cost of all that trading is also buried in the long report. Voluntary dealing — activity not caused by redemptions or subscriptions — cost £11,404,962 (0.084%) in the first half of 2026. The Ongoing Charges Figure for the T Class Accumulation shares was 1.05%, giving a Total Cost of Investment of 1.12% for the period.

New Positions Give the Strategy a Different Shape

Among the 12 stocks added in H1 2026, three illustrate how far the portfolio can shift beyond what factsheet names capture. According to reporting by Trustnet, the fund bought GE Vernova, which builds and services gas turbines and grid equipment and carries an order backlog of $163bn, equivalent to four times its 2025 revenues, with a small modular nuclear reactor project under construction in Canada due for completion by 2030. It also initiated a position in TSMC, which Smith described as manufacturing roughly 90% of the world’s most advanced semiconductors, with the position partly justified by the estimated $20bn cost of replicating a single advanced fabrication plant. The TJX Companies, parent of TK Maxx and Marshalls, was added on the basis of a network of more than 1,400 buyers sourcing from 21,000 vendors.

On the exit side, Atlas Copco was sold because, in Smith’s assessment, its organic growth had been anaemic over the prior two years and did not justify a free-cash-flow yield of less than 3% after the shares had risen sharply. LVMH, Zoetis, and Coloplast were also sold after featuring among the five largest performance detractors in the half. None of those exits would have been visible from the top-10 list until after the fact.

Fundsmith estimates its portfolio companies will grow their cash flow by approximately 14% per annum over the next three to five years, a figure Smith presents alongside fundamental characteristics including a return on capital employed of 31%, gross margins of 62%, and a free-cash-flow yield of 4.3% as at 30 June 2026. Those metrics give investors a way to judge whether the strategy still resembles what they bought, even when the constituent names have shifted.

The academic evidence on transparency cuts both ways. Research by Parida and Teo (2018) on US mutual funds that moved from semi-annual to quarterly disclosure after a 2004 Securities and Exchange Commission (SEC) rule found that previously strong-performing funds lost around 22.5 basis points the following month, with the effect most pronounced among those holding less liquid portfolios. A fuller reading of Smith’s own letter is the practical starting point. Beyond that, the annual and half-yearly long reports hold the complete picture. With portfolio turnover running at 51.8% over a single half-year, the gap between the last full report and today is where the meaningful changes live.

For investors in Fundsmith or any comparably active fund, the next full portfolio disclosure is the test: whether the geographic and sector tilts introduced in H1 2026 persist into year-end, and whether the new positions grow toward a weight that makes them visible in the headline list at all.