A star stock picker has cemented his status as one of the highest-paid investors after it emerged that Terry Smith stood to earn as much as £125 million from his Fundsmith asset management business last year.
The accounts for Fundsmith show that its boss took home £29.7 million of the £48.5 million in profits earned by the partnership in the 12 months to the end of March 2020. This was almost double the £16.2 million profit share he received a year earlier.
Smith, 67, was also entitled to an undisclosed share of the profits generated by Fundsmith Investment Services Limited which, like him, is based in Mauritius and handles administration, trading and research activities for his fund management empire.
The Mauritian entity charged Fundsmith £156 million for its services, up from £115.8 million in 2019, according to the UK partnership’s accounts.
The Mauritian group’s accounts are not disclosed, so its costs and earnings are unknown. However, given that Smith is thought to be entitled to the same proportion of its earnings as he received from Fundsmith, he could have received as much as £95.7 million from the Mauritian business if its costs had been nil. That would have lifted his total to approximately £125 million in 2020 before taxes. Tax rates in Mauritius, where Smith moved to in 2014, are lower than in Britain.
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A spokeswoman for Fundsmith declined to comment on the Mauritian group’s cost and profits and Smith’s share of its earnings.
Smith’s pay has surged as Fundsmith has enjoyed a boom. Its £48.5 million in profits last year were up almost 84 per cent from the £26.4 million in 2019.
He started the business in 2010 and its main fund, which manages £23 billion of assets, has proved popular with investors because of its performance.
Smith rose to prominence in 1992 when he was sacked as head of research at UBS Phillips & Drew, the stockbroker, after he wrote a book that was critical of practices that were widespread in the accounting world. He was later chief executive of Collins Stewart, the stockbroker, and Tullett Prebon, an inter-dealer broker.
