The Fundsmith Equity Fund underperformed the MSCI World Index amid AI-driven market momentum and high volatility.
Fundsmith Equity Fund reported a -2.9% return in the first half of 2026, trailing the MSCI World Index by 14.1 percentage points. The underperformance was attributed to a momentum-driven market favoring passive index funds and AI-related stocks, which skewed sector concentration.
The firm noted a 51% portfolio turnover during the period, reflecting increased market volatility. Fundsmith plans to adopt a more active investment approach while maintaining its core strategy of holding high-quality companies at reasonable valuations.
Among new holdings, Taiwan Semiconductor Manufacturing Company (TSM) was added as a technology position, with the stock closing at $404.25 on July 31, 2026.