London-based Fundsmith Equity Fund trails benchmark due to momentum-driven markets and AI sector concentration.
Fundsmith Equity Fund returned -2.9% in the first half of 2026, lagging the MSCI World Index by 14.1 percentage points. The underperformance stems from a market dominated by passive index funds and AI-related exuberance, which skewed sector and stock concentration.
The firm noted increased volatility and a 51% portfolio turnover in H1 2026, prompting a shift toward a more active investment approach. Fundsmith plans to integrate momentum strategies while adhering to its core principles of investing in quality companies at reasonable valuations.
Among its holdings, Fundsmith highlighted a new position in AppLovin Corporation (APP), which closed at $395.90 per share on July 31, 2026, with a market capitalization of $133 billion. APP shares fell 27.2% over the past month but gained 0.23% over the last 52 weeks.