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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.

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

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