Fundsmith CEO Terry Smith has laid out plans to hand over his share of the business to staff when he eventually steps down and floated head of research Julian Robins as a potential successor.
Although Smith is not stepping down from the investment boutique he founded over a decade ago, he outlined his plans for the eventuality at the Fundsmith Equity AGM yesterday.
Smith named head of research Robins, who has been at Fundsmith since its inception in 2010, as “the first line of defence in terms of succession”. Robins previously worked for BZW both in London and New York, before founding Collins Stewart’s New York office in 1999.
‘I may, like the Queen, stagger on for an improbable amount of time’
But he added the firm has taken on a number of new recruits in recent years some of who “certainly show the kind of form at the moment which I think might make them worthy successors in due course.”
The boutique asset manager has made a number of promotions over recent years. Last April, Tom Armstrong was promoted to partner of the firm, joining Conrad Rey, Greville Ward and Daniel Washburn who were all made partners in 2018.
Smith joked that Robins may become the Prince Charles of Fundsmith.
“I may, like [the Queen], stagger on for an improbable amount of time, and one of the Prince Williams’ may step forward at the appropriate moment. Who knows?”
Plans to redistribute his majority stake
Smith also outlined plans to distribute his majority stake in the firm to staff upon his departure, subject to tax arrangements.
“I want to take the majority of what I own in the firm and pass it onto other people in the firm in due course. I don’t think it’s a viable structure for the firm for the day that I’m not here…to still own the majority of the firm, or for my heirs.”
“I think the people who work in the firm have to own the majority of the firm and I firmly intend to get it to them. Having said that, it’s easier said than done, but I am working on it.”
In recent years Smith has taken a step back from some of his fund management duties, handing over the reins of the Fundsmith Emerging Equities trust to Michael O’Brien in 2019.
He remains the lead manager on both his flagship £22.6bn Fundsmith Equity fund and the £449.4m Fundsmith Sustainable Equity strategy.
A Fundsmith spokesperson said: “Terry is not considering retiring. He was simply describing Fundsmith’s succession plans, which it has to have in place, and which he has described many times in the past.”
Fundsmith’s flagship equity fund has returned 443% in the decade since its inception, returning 126.5% over five years, well above the IA Global average of 90.6%. However, its performance has fallen back, returning 18.1% over a year, below the industry average of 20.7%.
