Terry Smith (pictured) continues to add technology holdings to his flagship Fundsmith Equity Fund, opening a “currently small” holding in Apple, according to the business.
Technology stocks have experienced significant sell-offs this year, as climbing interest rates, the volatile geopolitical situation, and general economic slowdown have spooked investors. The traditionally tech-heavy Nasdaq index is down almost 40% over the year to date.
For the most part, Fundsmith Equity’s holdings in tech stocks, which now constitute 26% of the fund, followed that downward trend. During October, Meta was the fund’s largest detractor, as its stock price fell by around 30% over the month. Year-to-date, meanwhile, the stock’s value has fallen nearly 72%. Microsoft, the fund’s largest holding, and Amazon, were also among the top five biggest drains on performance, with the former suffering due to the slowing growth of its Azure cloud computing platform.
The drop in tech valuations has, however, created an attractive enough entry point for Smith to open the holding in Apple, whose shares now trade at $150 (£130), nearly 250% more than they did five years ago. Fundsmith’s description of the stake as “currently small” suggests that the possibility of growing the holding remains very much under consideration.
The fund’s best-performing holdings were to be found in the healthcare and pharmaceutical sectors, with Stryker, IDEXX and Novo Nordisk among the five that contributed the most value to the fund in October. Visa and Adobe made up the rest of the top five, as the latter bucked tech’s broader downward trend.
The fund is currently valued at £22.1bn, and returned -16% over the period from 1 January to 31 October 2022.
The only other alteration in the fund was a like-for-like replacement, as Smith purchased a stake in Otis, and sold off the holding in Kone; both companies manufacture and service lifts and moving walkways.