Terry Smith opens small holding in Apple for Fundsmith Equity

Veteran investor Terry Smith has bought Apple for Fundsmith Equity as part of the fund’s broader pivot to big tech.

Technology stocks have suffered significant sell-offs this year as central banks raise interest rates and investors focus on value stocks.

The tech-heavy Nasdaq index is down 35 percent from the year so far.

Smith said Apple now had a small portfolio position, while also adding elevator company Otis after it dropped its Finnish rival Kone over the summer.

The fall in technical valuations has created an attractive entry point for Smith to open stakes in Apple, completing a full-scale attack on the biggest US tech names.

Smith added Amazon to the portfolio in October last year before buying Google’s parent company Alphabet in January and joining long-standing stakes in Microsoft and Meta.

Fundsmith Equity’s holdings in technology stocks, which now make up 26 percent of the fund, have largely followed the industry’s downward trend.

In October, Meta led the fund’s biggest declines, as its share price fell about 30 percent and is now 74 percent lower than the year to date.

Microsoft and Amazon were also among the top five negative factors with slowing growth for Microsoft’s cloud computing platform Azure, especially in terms of investors. Microsoft finance chief Amy Hood cited higher energy costs for Azure’s declining profit margins.

Apple has outperformed other big tech names in its last earnings season, largely due to strong Mac sales associated with new product launches.

The latest results showed slowing growth and weakness in its service business, but indicated that demand for computers and phones remains strong.

While Apple experienced a 7 percent increase after its earnings, it remains 24 percent lower over the year so far.

Smith is not a committed tech investor, but promises to buy “good companies” – companies that can offer high returns, whose “benefits are hard to replicate” and companies that don’t require significant leverage to generate returns.

The fund’s best-performing holdings were in healthcare and pharmaceuticals, with Stryker, IDEXX and Novo Nordisk among the five best-performing holdings. Visa and Adobe also performed well despite the broader technical route.

Fundsmith Equity remained flat in October, underperforming the MSCI World Index, which gained 3.9 percent this month and fell 16.4 percent since January.

In September, Smith shocked the investment industry by announcing plans to close his emerging markets fund.

He closed the £325 million Fundsmith Emerging Equities Trust (FEET) as performance fell short of expectations.

He said at the time: “While FEET has delivered positive returns since its launch in 2014, it has fallen below our expectations and, unlike other fund managers who may be trying to hold onto the fund for the sake of fee income, we believe it would it is in the interest of the shareholders to recover their cash investment through portfolio liquidation and company liquidation.’