Star fund manager Terry Smith takes pay cut as profits slide

Stockpicker pins underperformance on decision against investing in all major tech companies

Terry Smith, the star fund manager, has taken a pay cut for the second year running following a fall in profits at his flagship fund.
Fundsmith, which the stockpicker runs from his home in Mauritius, recorded a profit of £46.4m in the year to the end of March, down from just under £50m the previous year, newly-filed accounts show.
Mr Smith took home roughly £28m last year, down from almost £32m in 2023 and around £36m in 2022.
Nevertheless, the 71-year-old remains one of the UK’s best-paid bosses, with his earnings eclipsing those of FTSE 100 chief executives. Pascal Soriot, the boss of pharmaceutical giant AstraZeneca who topped the blue-chip pay rankings last year, took home £16.9m. 
Although Mr Smith is based in Mauritius, dealing in shares in his fund takes place in the UK. 
The Fundsmith Equity Fund, which has assets under management of £22.8bn, made returns of 12.4pc last year. This lagged the rise of almost 17pc recorded by the MSCI World Index, which tracks global stocks.
Mr Smith has pinned the underperformance on his decision not to invest in all the major tech companies. The fund last year sold its position in Amazon after less than two years, criticising the ecommerce giant’s move into groceries.
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The fund manager has also been a vocal sceptic of artificial intelligence (AI), saying the race to develop the new technology may not produce a clear winner.
Other investors have piled into tech firms at the forefront of AI, with chipmaker Nvidia’s value surging to $1.6 trillion.
Fundsmith has said it is more focused on the long-term performance of its investments. Its flagship fund has returned almost 600pc since its launch in 2010, outpacing the MSCI World Index.
Fundsmith’s profits are shared between 17 investors, though Mr Smith retains the lion’s share. His true earnings are likely to be even higher than £28m as some of Fundsmith’s profits are transferred to a Mauritius-based sister company.
The UK partnership paid £186m to Fundsmith Investment Services Limited (FISL) in the latest year, broadly in line with the previous year. At the end of March, a net £49.5m remained payable to FISL.
Mr Smith, who first came to prominence as a financial analyst at Barclays in the 1980s, has gained a reputation as an activist investor. In 2022, he said Unilever had “lost the plot” over its fixation on the social purpose of Hellmann’s mayonnaise.
The stockpicker now runs his fund from Mauritius after moving to the island a decade ago. He has shifted much of his wealth, estimated at $1bn by Bloomberg, to the Seychelles.
In July it emerged that Mr Smith was relocating his private collection of more than 200 cars, including a McLaren F1 road car and an Aston Martin that featured in James Bond film Goldfinger, to Mauritius.
It follows a recent law change on the Indian Ocean island that means the collection, estimated to be worth more than £20m, can be imported tax-free.