Terry Smith’s Fundsmith Investment – Q4 2024 Top 10 Portfolio Holdings Analysis

Below is an updated overview of Fundsmith’s top 10 positions under Terry Smith’s management for the fourth quarter of 2024. The data reflects notable adjustments across several holdings, illustrating Fundsmith’s continued focus on high-quality companies with robust growth prospects and reliable cash flows.

1. Meta Platforms Inc. (META)

• Portfolio Allocation: 11.39%
• Recent Activity: Reduced 6.36%
• Shares Held: 4,561,352
• Reported Price: $585.51
• Value at Reported Price: $2,670,717,000

Meta Platforms remains Fundsmith’s largest holding, although the position was trimmed. As the parent of Facebook, Instagram, and WhatsApp, Meta benefits from continued global adoption of social media and robust digital advertising. Despite a slight reduction, the company’s push into virtual reality and the metaverse suggests optimism about its ability to diversify and maintain growth.

2. Microsoft Corp. (MSFT)

• Portfolio Allocation: 11.12%
• Recent Activity: Reduced 10.34%
• Shares Held: 6,187,033
• Reported Price: $421.50
• Value at Reported Price: $2,607,834,000

Microsoft, a longstanding core holding, saw a more significant cut this quarter. Still, the tech giant’s leadership in enterprise software, cloud computing (Azure), and AI-driven products underpins Fundsmith’s conviction in the company’s long-term growth trajectory. The reduction may reflect profit-taking or a desire to rebalance the portfolio.

3. Stryker Corp. (SYK)

• Portfolio Allocation: 8.19%
• Recent Activity: Reduced 0.05%
• Shares Held: 5,333,977
• Reported Price: $360.05
• Value at Reported Price: $1,920,498,000

Stryker, a leader in medical devices and equipment, remains a key healthcare holding. While the cut is minimal, it indicates a slight portfolio adjustment. Stryker’s diversified offerings in orthopedics, surgical equipment, and neurotechnology continue to align with Fundsmith’s preference for companies operating in essential, steadily growing markets.

4. Automatic Data Processing Inc. (ADP)

• Portfolio Allocation: 6.26%
• Recent Activity: Reduced 10.02%
• Shares Held: 5,013,712
• Reported Price: $292.73
• Value at Reported Price: $1,467,664,000

ADP provides payroll, HR, and workforce management solutions. The double-digit reduction signals a notable rebalance, but the position remains significant. ADP’s consistent demand from businesses for outsourced payroll and human capital management services fits Fundsmith’s model of steady cash generation and high client retention.

5. Visa Inc. (V)

• Portfolio Allocation: 6.23%
• Recent Activity: Reduced 16.66%
• Shares Held: 4,622,567
• Reported Price: $316.04
• Value at Reported Price: $1,460,916,000

Visa saw one of the more substantial reductions this quarter, potentially reflecting profit-taking after strong performance. Nonetheless, the global payments leader remains integral to Fundsmith’s portfolio, given the ongoing shift to digital and cashless transactions worldwide.

6. Philip Morris International (PM)

• Portfolio Allocation: 5.77%
• Recent Activity: Reduced 6.39%
• Shares Held: 11,245,175
• Reported Price: $120.35
• Value at Reported Price: $1,353,357,000

Philip Morris continues to serve as a high-margin consumer staples holding, albeit with a moderate share reduction. Despite regulatory pressures on tobacco, PM’s shift toward reduced-risk products (e.g., heated tobacco) suggests Fundsmith still sees value in the firm’s brand strength and cash flow generation.

7. Waters Corp. (WAT)

• Portfolio Allocation: 5.75%
• Recent Activity: Reduced 0.31%
• Shares Held: 3,634,522
• Reported Price: $370.98
• Value at Reported Price: $1,348,335,000

Waters, a specialist in analytical instruments and software for life sciences, remains an important healthcare and research technology holding. The minor reduction likely reflects a routine portfolio adjustment. Waters’ consistent revenue from pharmaceutical and biotech clients aligns with Fundsmith’s emphasis on resilient business models.

8. Alphabet Inc. (GOOGL)

• Portfolio Allocation: 5.53%
• Recent Activity: Reduced 0.06%
• Shares Held: 6,848,278
• Reported Price: $189.30
• Value at Reported Price: $1,296,379,000

Alphabet, parent of Google, YouTube, and various AI ventures, remains a central technology holding despite a negligible trim. With leadership in digital advertising, cloud computing, and autonomous vehicle research, Alphabet’s multi-pronged growth potential continues to support its position in Fundsmith’s portfolio.

9. Marriott International (MAR)

• Portfolio Allocation: 5.06%
• Recent Activity: Reduced 0.27%
• Shares Held: 4,255,340
• Reported Price: $278.94
• Value at Reported Price: $1,186,985,000

Marriott, a global hospitality leader, offers exposure to travel and leisure. The slight reduction suggests modest profit-taking, yet Fundsmith appears to maintain confidence in Marriott’s extensive brand portfolio and the rebound in business and leisure travel demand.

10. IDEXX Laboratories (IDXX)

• Portfolio Allocation: 4.69%
• Recent Activity: Reduced 0.05%
• Shares Held: 2,662,855
• Reported Price: $413.44
• Value at Reported Price: $1,100,931,000

IDEXX, specializing in veterinary diagnostics and water testing, saw a marginal cut but remains a crucial healthcare play in Fundsmith’s lineup. The pet healthcare market’s ongoing expansion supports IDEXX’s long-term growth prospects, aligning with Fundsmith’s strategy of investing in niche leaders.

Analysis of Terry Smith’s Q4 2024 Portfolio Strategy

1.  Widespread Minor Reductions
Most positions experienced reductions, ranging from modest to more substantial (e.g., Visa at 16.66% and Microsoft at 10.34%). This pattern suggests a portfolio-wide rebalancing or profit-taking approach rather than a fundamental shift in strategy.

2.  Tech and Healthcare at the Forefront
Meta, Microsoft, and Alphabet anchor the technology segment, while Stryker, Waters, and IDEXX bolster healthcare exposure. These sectors align with Fundsmith’s preference for businesses that exhibit high returns on capital and stable growth drivers.

3.  Consumer & Payment Themes
Visa and Philip Morris underscore the portfolio’s tilt toward consumer-facing industries, with Visa benefiting from digital payment trends and Philip Morris continuing to generate substantial cash flow despite shifting tobacco consumption patterns.

Conclusion

Terry Smith’s Q4 2024 portfolio shows a disciplined approach to rebalancing and profit-taking, evidenced by small to moderate reductions across nearly all top positions. Despite these trims, core holdings in technology (Meta, Microsoft, Alphabet), healthcare (Stryker, IDEXX), and essential services (ADP, Visa) remain integral to Fundsmith’s philosophy of investing in high-quality companies with enduring competitive advantages. This consistent strategy aims to capture long-term growth and robust cash flow generation while managing risk through incremental portfolio adjustments.

Disclaimer:
This analysis is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. Investing involves risks, including the potential loss of principal. Past performance is not indicative of future results. Investors should conduct their own research or consult a qualified financial advisor before making investment decisions.