Terry Smith: The keys to equity investing in 2012

Most investors would be better off using index funds than active managers, but high quality corporates can still prosper in 2012, according to Terry Smith.

His Fundsmith Equity fund returned 7.5% in the year to 30 December 2011, according to Morningstar, versus an IMA Global sector average fall of 9.5%. Smith said the fund's performance had been driven by holdings in Domino's Pizza, Philip Morris, Imperial Tobacco, Colgate Palmolive, and Unilever. Principal detractors were Serco, Kone, Becton Dickinson and Intercontinental Hotels. The manager has sold out of Domino's, however, after a steep climb in its share price and concerns over its ability to refinance debt, due to take place in 2014, given the market environment. Smith said h...