🔱 The investment strategy of Terry Smith

This report summarises the investment strategy of Terry Smith, managing partner at Fundsmith, based on his own words. It outlines how he identifies quality companies, values them and manages them inside his portfolio. There are a lot of useful insights here, so let's take a look.

1. How He Assesses the Quality of a Company

Terry Smith’s investment philosophy begins with a strict quality filter. Rather than starting with valuation, Smith instead begins by focusing on identifying companies that create value consistently and predictably, across market cycles.

What he avoids

Smith's process is defined by what he excludes. He starts by removing companies with poor economics and financials. “We are screening to get rid of bad companies.” He rules out anything that is: