Fundsmith sales jumped 50% ahead of Smithson launch

UK partnership sends bulk of £120m turnover to Mauritius company

Fundsmith sales jumped 50% in its latest financial results, which do not include the record launch of the Smithson Investment Trust.

Sales at the boutique fund group rose 50.3% to £122.8m for the period ended 31 March 2018, up from £81.7m in the 2017 financial year.

The jump in group sales came ahead of Fundsmith’s successful launch of the Smith Investment Trust, which became the largest IPO of a UK-domiciled investment trust, raising £822.5m in October 2018 and beating the Woodford Patient Capital launch in April 2015.

Fundsmith does not disclose group assets under management but the flagship Equity fund grew from £10.3bn to £13.4bn for the year ended 31 March 2018. Its December 2018 factsheet shows it currently holds close to £15.8bn.

In November 2017, the fund group launched the Sustainable Equity fund in addition to its flagship Equity fund and the Emerging Markets Trust, which launched in 2014.

Mauritius company delivers hefty charge

Administrative costs at the partnership were high at £101.8m up from £67.5m in the previous financial year. Group operating profits increased 48% to £21m. In 2017, operating profit had been £14.2m.

Woodford Investment Management, which reported on its accounts for the same period this week, had administrative costs of £34.7m on turnover of £78m. Neil Woodford’s boutique had AUM of £15.94bn at 31 March 2018.

A note in the company accounts said Fundsmith Investment Services Limited, domiciled in Mauritius where founder and star manager Terry Smith (pictured) is based, charged the partnership £88.4m for delegated services during the reporting period. In 2017, it had charged £57.1m.

Approximately a third of Fundsmith’s 36 staff are based in Mauritius, including Smith, covering roles in investment services, research trading, accounting and administration.

Headcount at the UK-based partnership was 18 at the end of the reporting period up from 15 in 2017. Terry Smith, the member with the largest entitlement, took home £12m from the partnership compared to £8.1m in 2017.

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