Fundsmith Equity Fund's Mid-Year Performance and Portfolio Adjustments

This report provides an in-depth analysis of the Fundsmith Equity Fund's performance during the first half of 2026, highlighting specific investment decisions and challenges faced by key portfolio companies. It delves into the rationale behind divesting from certain holdings and maintaining others, offering insights into the fund's strategic approach amidst market fluctuations.

Navigating Market Dynamics: Fundsmith's Mid-Year Review

First Half 2026 Performance Overview for Fundsmith Equity Fund

During the initial six months of 2026, the Fundsmith Equity Fund recorded a decrease of 2.9%. This performance was notably below its benchmark, the MSCI World Index (£ net), by a margin of 14.1 percentage points.

Evaluating Atlas Copco's Investment Viability

Atlas Copco (ATLKY) has demonstrated stagnant organic expansion over the past two years. This sluggish growth profile, in our opinion, does not support its current Free Cash Flow (FCF) yield of less than 3%, especially given the substantial increase in its share price over the last year. Consequently, its position within the fund is under scrutiny due to valuation concerns.

Challenges Faced by EssilorLuxottica and Magnum Ice Cream Co.

EssilorLuxottica encountered difficulties as its smart glasses division yielded lower profit margins than anticipated, compelling the company to revise its long-term profitability targets. Separately, Magnum Ice Cream Co. was considered for investment, but its limited size and low trading volume prevented the fund from establishing a significant and impactful holding.