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A very slightly weird calculation

Star stock picker Terry Smith stood to earn up to £125m last year

Oh aye?

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.

Nil costs is a realistic assumption, isn’t it?

6 thoughts on “A very slightly weird calculation”

  1. Bloke in North Dorset

    “That would have lifted his total to approximately £125 million in 2020 before taxes.”

    So that’s what, £75m to to the exchequer? Are they complaining or or congratulating him?

  2. Didn’t you realise Tim that these groups and trusts run themselves? As it is, since Smith has stated his intention to transfer his holding in Fundsmith to the current staff, there is probably a small army of lawyers and accountants doing work for these entities

  3. @ Diogenes
    Worth quoting from that article (by guys who are supposed to know a bit about Fund Managers) “The figure forms the vast bulk of Fundsmith’s expenses and covers the cost of investment management for the group’s funds, along with research, trading and operational outgoings. The £45m increase in the payment to the Mauritius office last year is reflected in Fundsmith’s total administrative costs rising from £138.9m to £179.9m over the period. “

  4. If I’m reading this right, and got the maths correct;

    It’s a £23~26 billion fund. £156 million is about half of one percent, 50 basis points. No performance fee, open-ended with no front loading.

    Looks like a good deal to me.

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