Terry Smith: Nvidia is too unpredictable for Fundsmith to invest in

Semi-annual letter to investors

Manager of Fundsmith Equity Terry Smith has explained his investment case against AI-chip manufacturer Nvidia, despite missing out on outperformance in the first half of the year due to not owning the company.

Writing to shareholders in his semi-annual letter, Smith outlined the fund's return profile for the opening half of the year. Fundsmith Equity made a 9.3% total return between 1 January and 30 June 2024, which Smith said would "normally be cause for celebration", especially as the fund outperformed bonds - when using the Bloomberg Series-E UK Govt 5-10 Year Bond index as a proxy comparison (-2.2%) and holding cash at a 2.6% interest rate. However, on this occasion, Fundsmith's returns underperformed the MSCI benchmark. The MSCI World index made 12.7% over the six-month period, whic...