Terry Smith sold Nike and Unilever to buy Mastercard and Netflix. The Fundsmith manager now factors in momentum and fund flows, podcast participants said.
Terry Smith, the manager of the Fundsmith Equity fund, has overhauled his portfolio. He sold stakes in Nike, Novo Nordisk, Unilever, and six other quality names. He bought Mastercard, Netflix, TSMC, Uber, and Yum Brands.
The shift emerged during a recent episode of the Value: After Hours podcast. Hosts Jake Taylor and Tobias Carlisle discussed Smith’s strategy change. Taylor said Smith is “taking account of momentum now in buying these stocks.” He listed the sold names: EssilorLuxottica, Intuit, Louis Vuitton, Magnum Ice Cream, Mettler Toledo, Nike, Novo Nordisk, Otis, and Unilever. The new buys include MA stock page (Mastercard), Netflix, TSMC, Uber, and Yum Brands.
Carlisle pointed out that Smith is “explicitly taking into account fund flows.” He questioned whether a manager is “allowed to talk about that.” Taylor replied that fund flows are a real constraint. Professional investing, he said, requires managing not just your own psychology but also your clients’ psychology. He called the move “a little like capitulation” but added that Smith “probably knows what he’s doing.”
The podcast framed the change as a response to long-running underperformance in both value and quality strategies. “Value’s been underperforming for a long time,” Carlisle said. “Quality has been pretty handy until lately.” Smith, known for a consistent quality-focused approach, may be adjusting to protect his fund’s performance and client base. The new holdings lean toward growth and momentum – Mastercard and Netflix have rallied, TSMC benefits from AI chip demand, and Uber has turned profitable.
Taylor said Smith is “more quality than value” on a continuum they both share. Carlisle described himself as “more value than quality,” adding that he is “inured to” value’s long slump. The difference in their portfolios underscores the tension between sticking to a philosophy and adapting to market flows.
Mastercard, Smith’s new buy, carries an Alpha Score of 72 out of 100 on AlphaScala, a Moderate label in the Financials sector. The payment network has benefited from resilient consumer spending and cross-border travel. Whether Smith’s pivot to momentum and fund-flow awareness marks a permanent change or a tactical shift remains an open question. Taylor said Smith is a good investor. “I think that he knows what he’s doing.”
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