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Billionaire Money Manager Terry Smith Sees Worst Payday in Seven Years

2023-11-14 18:29
Terry Smith, the UK’s most popular money manager, saw his first pay drop since 2016, as his funds
Billionaire Money Manager Terry Smith Sees Worst Payday in Seven Years

Terry Smith, the UK’s most popular money manager, saw his first pay drop since 2016, as his funds saw a slide in both assets and profits.

Smith, who’s lived in Mauritius for the past decade and manages the UK’s largest retail equity fund, got £31.1 million ($38.2 million) in the 12 months through March, down from £36.4 million a year earlier, according to a statement Tuesday. Profit at Fundsmith LLP declined 14% to £50 million and assets under management fell 8% to £36.4 billion as clients pulled money.

Fundsmith is among asset managers hit by a slump in profits as higher interest rates and geopolitical tensions roil the industry. In 2022, the firm’s flagship Fundsmith Equity fund that now manages £23 billion had its first slowdown in more than a decade after returning more than 500% since its inception in 2010. In the latest financial year through March, it was up only 3%, according to data compiled by Bloomberg.

But the firm’s latest earnings statements don’t provide a full picture of its operations.

Earlier this year Bloomberg News reported that Smith became a billionaire and showed how he has moved more of his interests away from Britain through legal entities in tax havens that lead to a trust in Seychelles, an island-nation in the Indian Ocean. In 2022, he also transferred most of his stake in his asset manager to this trust.

Since 2015, Smith has shipped a greater proportion of his wealth to Mauritius, making payments of hundreds of millions of pounds to a company based on the island. In the year through March, the Mauritius company Fundsmith Investment Services Ltd. charged the UK business £185.7 million.

Smith started his firm after a career in the City of London that included a stint at leading broker Tullett Prebon. The asset manager he now runs is a partnership, meaning that members share the profits.

Apart from the Fundsmith Equity fund, Smith also manages some smaller funds in the UK and a vehicle for private investors in Mauritius. Turnover at the firm dropped to £278.5 million from £358.1 million.

(Updates with background in seventh paragraph.)