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Terry Smith, one of the UK’s most renowned stockpickers, took a pay cut for the second consecutive year, receiving almost £28mn from his investment business.
The Mauritius-based fund manager’s investment boutique Fundsmith reported a dip in pre-tax operating profit over the year to the end of March, dropping to £47mn from £50mn the previous year.
Smith, who set up the firm in 2010 and manages the £23bn Fundsmith Equity fund, is paid the bulk of the profit from the business.
However, his payout fell from £31mn in 2023 and £36mn in 2022.
Despite the decline, Smith’s remuneration still surpasses the pay of FTSE 100 investment bosses. Schroders’ former chief executive Peter Harrison received £6.2mn in 2023, while M&G’s chief executive Andrea Rossi was paid £2.7mn.
Pascal Soriot, chief executive of pharmaceutical business AstraZeneca, was one of the best-paid FTSE 100 bosses with a £17mn package last year.
Smith said earlier this year that Fundsmith had been hit by his decision to avoid tech giant Nvidia, with his global fund lagging behind the MSCI World index.
Smith, who focuses on backing “growth” stocks that are driven by their future earnings potential, said he was not convinced that Nvidia’s outlook was “as predictable as we seek”.
He said at the time that “outperformance was difficult to attain” in his fund as a result of avoiding Nvidia and not holding enough of the other big tech companies. He noted in July that the fund’s stake in Apple “remains small as we wait patiently for the stock price to reflect the company’s current trading”.
The Fundsmith Equity fund returned 12.4 per cent last year, falling behind the MSCI World index’s sterling return of 16.8 per cent. However, the fund has returned almost 600 per cent since its launch, exceeding the MSCI World index’s 381 per cent in sterling terms over this time.
Smith’s top 10 holdings include US tech groups Microsoft, Google parent Alphabet, and Meta Platforms, which owns Facebook. Smith sold the portfolio’s stake in online retailer Amazon last year telling investors that he had concerns over potential capital misallocation.
The fund manager also started buying a stake in semiconductor manufacturer Texas Instruments over the first half of the year.
Smith has in the past pointed to the effect of central banks’ actions on his fund’s performance, noting last year that the end of “easy money” had dented returns.
Fundsmith declined to comment.
