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Private equity returns are broken: the case of David Lloyd

Private equity returns have collapsed as the $3.2 trillion exit crisis deepens. Why David Lloyd's sale to itself reveals an industry model that's fundamentally broken.

Robin Powell

Line chart showing Fundsmith Equity Fund (blue line) versus MSCI World Index (red line) from November 2010 to October 2025. Fundsmith significantly outperformed through 2020, reaching 625% cumulative return versus the index's 310%. From late 2021 onwards, the gap narrowed dramatically as Fundsmith stagnated around 625% while the index climbed to 520%. Most investor money entered the fund when the performance gap was widest, meaning late arrivals experienced only the period of underperformance.

The Terry Smith timing trap: why most investors lost money

Terry Smith's Fundsmith beat the market for a decade, then trailed four straight years. £3.31bn fled in 2024. Most investors lost money vs a tracker. Why? Timing. They bought high after stellar returns, sold low during underperformance. Jack Bogle's iron law: money arrives after gains, leaves during losses. Even star managers can't beat that.

Robin Powell

3 days ago6 min read

Is Terry Smith genuinely skilled or did he just get lucky?

Terry Smith's Fundsmith Equity fund has underperformed for four years, losing billions in outflows. But is this evidence of declining skill or simply bad luck? Academic research reveals it takes 36-800 years of data to statistically prove a fund manager has genuine talent rather than benefiting from chance. Smith's 14-year track record, despite early success, is statistically meaningless. His recent struggles with NVIDIA, Apple and Novo Nordisk may look like stock-picking err

TEBI

Jul 87 min read

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