Home / Business and Economy / Fundsmith's Fund Slips: Momentum Market Challenges Rise
Fundsmith's Fund Slips: Momentum Market Challenges Rise
3 Aug
Summary
- Fundsmith Equity Fund saw a -2.9% return in H1 2026.
- Passive investing's rise concentrates index funds in few stocks.
- Veeva Systems' specialized software offers high switching costs.
The Fundsmith Equity Fund reported a -2.9% return for the first half of 2026, significantly trailing the MSCI World Index. This performance was impacted by a market favoring momentum trades and AI-related stocks, alongside the increasing concentration of passive index funds.
In response to market volatility and a high portfolio turnover of 51% in the first half of the year, Fundsmith intends to adjust its strategy. While maintaining its core investment principles, the firm will incorporate momentum into its approach.
The fund's Q2 2026 investor letter highlighted Veeva Systems Inc., a technology company serving the life sciences sector. Veeva provides specialized cloud-based software crucial for tracking drug development and compliance, with its platform essential for regulatory audits.
Veeva Systems benefits from substantial switching costs, making it difficult and costly for pharmaceutical companies to change providers. This competitive advantage, coupled with upselling new modules and leveraging AI for administrative tasks, supports its growth.
As of July 31, 2026, Veeva Systems Inc. closed at $203.78 per share, with a market capitalization of $33.10 billion. The company posted a one-month return of 6.13%, though its shares had declined 28.57% over the preceding 52 weeks.
