Has Terry Smith lost his mind?!

Typically, he doesn’t trade much.

But in the first six months of 2026, he turned over more than 50% of his portfolio.

He even announced a major shift in his investment strategy.

Let’s see what’s happening.

Who is Terry Smith?

Terry Smith is often called “The English Warren Buffett”.

He’s considered as one of the best quality investors in the world.

Terry typically is very straightforward and an independent investor.

His background looks like this:

• Grew up in East London, was at the top his class in history at Cardiff, and entered banking at Barclays in the 1970s.

• In 1992, he wrote Accounting for Growth, a book that exposed corporate accounting tricks and was so controversial that it got him fired.

• Launched Fundsmith in 2010. Today, it manages £12 billion and has achieved an impressive 13.1% CAGR after fees since inception.

Pieter even had the opportunity to have dinner with Team Fundsmith in Omaha at Gorat’s last year (Warren Buffett’s favorite steakhouse).

Investment Style

Terry Smith’s philosophy is simple.

It comes down to three steps:

1. Buy Good Companies

Terry Smith looks to buy high-quality businesses that dominate their markets.

• High ROCE: Look for a Return on Capital Employed of more than 15–20%

• Wide Moats: Focus on companies with pricing power and high gross margins

• Cash is King: Prioritize strong organic growth and businesses that convert a lot of their net earnings into free cash flow.

2. Don’t Overpay

While quality comes first, valuation still matters.

He is willing to pay a fair premium for an exceptional business but tries to avoid overpaying.

3. Do Nothing

Minimizing trading keeps fees low and lets compounding do the work over time.

Patience has been one of Terry’s main advantages.

The Fundamentals

Fundsmith does hold a portfolio of companies with great fundamentals: