Terry Smith Advocates for Reeves to Scrap Tax Increases to Encourage UK Investment
Fund manager Terry Smith takes a bold stand, challenging Chancellor Rachel Reeves to scrap her planned tax hikes to stimulate investment in the UK.
Smith, the brain behind the £20bn Fundsmith Equity fund, champions a reassessment of current taxation and regulatory policies. He ardently believes that this shift would gear the UK towards attracting more investments.
"Reversing a considerable chunk of the policies related to taxation and regulation would be my primary focus to lure investments," he told the BBC.
In her previous October Budget, Reeves had hiked the UK's tax burden to levels unparalleled in its history, setting it on a path to hit 38 per cent of GDP by the end of the decade.
Smith underscored the importance of better-quality companies in the UK market to garner investor interest. "There's a limited pool of decent companies that I trust investing in," he stated.
Citing sectors fraught with mediocre companies, such as oil and gas, banking, and utilities, Smith questioned their quality and suitability for investment.
UK-listed equities continue to lag behind US markets, with international investors showing little enthusiasm for British markets.
Smith, though, is unperturbed by recent turbulence from US President Donald Trump's tariff regime, asserting his tried-and-tested buy-and-hold strategy.
"We've been managing funds for 15 years and have succeeded in creating substantial returns," the manager explained. "Even if we miraculously managed to replicate this success over the next 15 years, I strongly doubt predicting the Trump tariffs would be a major factor in our achievements."
The Performance of Fundsmith
Fundsmith has garnered acclaim as one of the UK's top-performing funds, largely due to the stock-picking acumen of Smith, which has propelled its growth by 555 per cent since its inception.
However, the fund recently found itself in the crosshairs after registering its fourth consecutive year of underperformance in 2024 compared to its benchmark of 20.8 per cent. Despite holding growth-oriented companies like Microsoft and Meta in his top holdings, Smith's decision to omit trailblazers such as Nvidia impacted performance.
Critics have also targeted Smith's passive approach, attributing his minimal stock turnover and limited stock selection to the fund's stagnant performance.
In the face of growing competition, Fundsmith was dethroned as the UK's largest investment fund by St James's Place for the first time since March 2019.
- Terry Smith, the manager behind the £20bn Fundsmith Equity fund, has been criticized for his investment strategies, especially after the fund registered four consecutive years of underperformance in 2024 compared to its benchmark.
- Smith, despite his success in making Fundsmith one of the UK's top-performing funds with a growth of 555% since its inception, has been questioned for his approach, with critics attributing the fund's stagnant performance to his minimal stock turnover and limited stock selection.
- In an effort to boost investments in the UK, Smith has been vocal about a reassessment of current taxation and regulatory policies, suggesting that a reversal of these policies could attract more investments.
- Smith advocates for better-quality companies in the UK market, stating that there's a limited pool of decent companies he trusts investing in, while questioning the quality and suitability of sectors like oil and gas, banking, and utilities for investment.
- Smith's steadfast buy-and-hold strategy has enabled him to navigate the turbulence caused by US President Donald Trump's tariff regime, despite UK-listed equities lagging behind US markets and showing little appeal to international investors.
- Despite being dethroned as the UK's largest investment fund by St James' Place for the first time since March 2019, Smith remains unfazed, explaining that even if he managed to replicate the fund's success over the next 15 years, predicting the Trump tariffs would not be a major factor in their achievements.
