Fund manager Terry Smith’s salary falls to £28m

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Terry Smith, one of the UK’s most famous stock investors, has taken a pay cut for the second year in a row, taking almost £28m from his investment business.

Mauritius-based fund manager Fundsmith has reported a fall in pre-tax operating profits for the year to the end of March, falling to £47m from £50m the year before.

Smithwho founded the company in 2010 and manages the £23 billion Fundsmith Equity fund, is paid most of the profits from the business.

However, his payout has been reduced from £31m in 2023 and 36 million pounds in 2022.

Despite the decline, Smith’s remuneration still exceeds that of FTSE 100 investment bosses. Former Schroders chief executive Peter Harrison received £6.2m in 2023, while the chief executive of M&G Andrea Rossi was paid £2.7 million.

Pascal Soriot, chief executive of pharmaceutical company AstraZeneca, is one Highest paid FTSE 100 boss with a package worth £17 million last year.

Smith said earlier this year that Fundsmith was influenced by its decision to stay away from the tech giant. Nvidiawhen his global fund lagged the MSCI World index.

Smith, who focuses on supporting “growth” stocks driven by future earnings potential, said he does not believe Nvidia’s outlook is “as predictable as we would like.” .

At the time, he said it was “difficult to achieve outperformance” in his fund due to avoiding Nvidia and not holding enough shares of other big tech companies. He noted in July that the fund’s stake in Apple “remains small as we patiently wait for the stock price to reflect the company’s current trading.”

The Fundsmith Equity fund returned 12.4% last year, less than the 16.8% return of the MSCI World index. However, the fund has returned nearly 600% since launch, surpassing the sterling-weighted MSCI World index by 381% during this time.

Smith’s top 10 holdings include American technology group Microsoft, Alphabet, Google’s parent company, and Meta Platforms, which owns Facebook. Smith sold his portfolio stake in online retailer Amazon last year and told investors he was concerned about the possibility of capital misallocation.

The fund manager also began buying shares of semiconductor maker Texas Instruments in the first half of this year.

Smith has previously pointed out the impact of central banks’ actions on his fund’s performance, noting last year that the end of “easy money” profits have been dented.

Fundsmith declined to comment.