The annual shareholder meeting for Fundsmith Equity (GB00B4Q5X527) took place in late February and is now available for viewing online. The fund has seen substantial long-term gains, but it underperformed the MSCI World index for the fourth consecutive year in 2024. As global markets have been dominated by US tech giants, 2025 presents new challenges that may affect the fund’s performance.

During the meeting, Terry Smith addressed the fund’s recent underperformance and highlighted specific holdings that struggled in 2024. For example, L’Oréal faced challenges in China, but Smith expressed confidence in the company’s long-term prospects. Similarly, Idexx, a veterinary software provider, experienced difficulties post-pandemic, but Smith emphasized the importance of holding onto the stock.

Smith remains bullish on companies like Brown-Forman and Nike, citing their strong market positions and potential for growth. However, Novo Nordisk, a weight-loss drug manufacturer, is expected to be a controversial holding in 2025 due to industry competition. Despite challenges, Smith believes in the company’s drug discovery capabilities and competitive advantages.

In addition to discussing specific holdings, Smith delved into topics like Betteridge’s law of headlines, which he used to dismiss doubts about the future of active management. The composition of the fund has also evolved over time, with consumer staples decreasing as a percentage of the portfolio.

Major holdings in the fund include Microsoft, Meta, and Novo Nordisk, reflecting a mix of technology, healthcare, and consumer goods companies. As investors navigate an uncertain market environment, monitoring these key positions will be crucial for assessing Fundsmith Equity’s performance in the year ahead.