Terry Smith has ditched his stake in Finnish elevator company Kone, months after it warned of a sales slowdown.
It was the sole holding Smith jettisoned from Fundsmith Equity in August, according to the fund’s latest factsheet.
Kone had been a mainstay holding of the £23.5bn fund, with the star manager initiating a stake in 2011, shortly after the launch of his flagship vehicle.
Though the elevator maker’s share price has doubled since then, over the past year it has slumped 44%, as the company has been hit by supply chain difficulties and rising costs.
It was one of Fundsmith Equity’s worst performers in 2021, alongside consumer goods giant Unilever, and has consistently been one of the biggest detractors to performance this year.
The outlook has grown bleaker in recent months. In July, Kone warned that revenue and profits for the year would be lower, after sales in China, one of its key markets, were hampered in Q2 by lockdown restrictions stemming from its zero-Covid policy.
Kone is the latest longstanding holding to be booted from Fundsmith Equity. Becton Dickson, one of the fund’s top 10 investments at its debut, was jettisoned last October and this February Johnson & Johnson was cut.
Smith, who is famed for his buy and hold strategy and relatively low portfolio turnover, has carried on making a number of chops and changes, as his fund has delivered patchier performance.
In the past year, he has reversed his stance on a number of tech giants, adding Amazon and Google-parent Alphabet to the fund, and more recently, Adobe.
He also bought Mettler Toledo, a manufacturer of weighing scales and analytical instruments, and divested from Starbucks.
Fundsmith Equity modestly lagged the MSCI World in August, returning -0.8%, while the index rose 0.2%.
Driving performance were Paypal, Automatic Data Processing, Philip Morris, Pepsico and Brown-Forman. Waters, IDEXX, Novo Nordisk, L’Oréal and Church & Dwight were the biggest detractors.
Over the past year, the fund has lost 11.2%, worse than the IA Global average (-7%), but it remains in the top quartile over five years (68.9% vs 48.1%).
See also: Fundsmith handed clean sheet after section 166 review