Fundsmith’s Lost Decade? Why the Darling of UK Investors Now Looks Second-Rate

For years, Fundsmith Equity Fund was the crown jewel of British investing. Terry Smith’s mantra of buying quality companies and doing nothing was marketed as the antidote to investor overtrading and costly mistakes. But the last five years tell a different story: mediocrity.

The Numbers Don’t Lie

Between 17 September 2020 and 18 September 2025, the Fundsmith Equity Fund T Inc returned just +32.8%. That sounds fine until you put it into context.

Meanwhile:

That’s the problem in black and white. A simple, low-cost world tracker left you £51,000 richer on a £100,000 investment than Fundsmith. Even the unloved UK market thrashed it.

The Compounding Disaster

The true cost of underperformance isn’t five years. It’s twenty.

If those annualised rates persist over 20 years, £100,000 compounds to:

• Fundsmith (5.8% p.a.) → ~£310,000

• MSCI World (13% p.a.) → ~£1.15 million

• FTSE All-Share (11.5% p.a.) → ~£880,000

This is the brutal reality of pensions and long-term investing. A few percentage points each year turns into hundreds of thousands left on the table.

Why the Slide?

1. Style mismatch: Fundsmith avoids cyclical and capital-intensive businesses, focusing on “quality” consumer and healthcare firms. That has meant missing out on the megacap US tech surge that’s driven global markets.

   
   

   

2. Fees vs trackers: At around 0.95% OCF, Fundsmith charges nearly ten times more than a global index ETF. Paying high fees for low returns is doubly painful.

   
   

   

3. Narrative over numbers: Investors stuck because of Smith’s compelling story. But storytelling doesn’t compound – returns do.
   

   

The Verdict

Fundsmith hasn’t been a disaster. It has made money. But investors don’t just want “not a disaster”. They want growth. They want their pensions and ISAs to work as hard as possible.

And here’s the uncomfortable truth: Fundsmith has failed to beat the simplest benchmarks over five years. It hasn’t protected capital meaningfully better, and it hasn’t captured the upside.

If you want mediocre returns dressed up as wisdom, Fundsmith delivers. If you want real wealth creation, the numbers say: look elsewhere. Disclaimer: This article is for educational purposes only and does not constitute investment advice. The data presented is sourced from publicly available information believed to be accurate as of September 2025, but no warranty is made regarding its completeness or reliability. Past performance is not a reliable indicator of future results. All investments carry risk, including the possible loss of capital. Investors should conduct their own research or consult a regulated financial adviser before making investment decisions. Alpesh Patel OBE www.campaignforamillion.com