Terry Smith has tapped into French luxury goods giant LVMH via Fundsmith Equity, according to the fund’s December factsheet.
The stock entered 2020 with a share price of €419.10 and closed the year at €510.90. During the coronavirus sell-off it hit lows of €295.
LVMH is the MSCI Europe Textiles, Apparel and Luxury Goods index’s largest constituent with a 36.4% rating – much higher than Adidas, the next highest weight at 13.8%, and rival Kering, which represents 12.5% of the portfolio. During the coronavirus sell-off in February and March 2020 the index fell 32.1%, according to FE Analytics.
LVMH, which owns brands such as Louis Vuitton and Dior, is controlled by the Arnault family with Bernard Arnault being the company’s chairman and chief executive.
During the first months of the coronavirus pandemic, Smith said family-controlled businesses are a good bet for income investors as they are unlikely to cancel dividends.
During 2020, Smith’s £23.2bn fund returned 18.3% compared to a 15.1% return in the Investment Association Global sector, according to FE Analytics.
In December, Paypal, IDEXX, Philip Morris, Estée Lauder and Intuit were the top-five contributors to performance, while the worst detractors were Facebook, Kone, Brown Forman, Unilever and Automatic Data Processing.
Last year, Baillie Gifford Long Term Global Growth Investment was the top-performing fund in the Investment Association Global sector delivering 95.5%, while Baillie Gifford Positive Change returned 80.1%.
See also: Mark Denham: ‘Don’t forget Europe has amazing businesses like LVMH’
