Fundsmith Q1 2026 13F Holdings and Activity Report

I. Institutional Overview

The current state of the Fundsmith portfolio reflects a psychological portrait of an institution that is deeply cautious about market valuations while remaining fiercely loyal to the "quality" factor. With a portfolio value exceeding $12.8 billion, the decision to hold only 34 positions means the average position size is nearly $380 million. This level of concentration implies that every single holding has undergone rigorous fundamental scrutiny. There is no room for "filler" stocks or speculative bets; every company must possess a durable competitive advantage, high returns on invested capital, and the ability to generate consistent cash flows. However, the most striking feature of this quarter’s report is not what was added, but the scale of the reductions. Almost every major holding saw a double-digit percentage decrease in share count, suggesting that the institution is actively harvesting gains or raising a significant "war chest" of cash to navigate perceived macroeconomic headwinds.

This section shows only part of the complete report. View the app for the full analysis, position-level detail, and quarter-over-quarter tracking.

II. Sector Allocation Analysis

Consumer Staples (16.36%) and Communication Services (12.52%) provide the secondary layers of the portfolio. The staples allocation, featuring names like Philip Morris and Church & Dwight, reflects a desire for "boring" but predictable cash flows. These are businesses that sell small-ticket, repeat-purchase items—the ultimate hedge against a consumer slowdown. Conversely, the 8.93% in Consumer Discretionary is almost entirely concentrated in high-quality brands like Marriott, which benefit from the "experience economy." The fact that this sector is significantly smaller than Staples suggests that Fundsmith is cautious about the discretionary spending power of the global middle class in the near term.

In conclusion, the sector allocation of Fundsmith is a masterclass in "Quality-First" macro positioning. The institution is heavily overweight in sectors with high pricing power and low capital intensity, while remaining underweight or entirely absent from cyclical, capital-heavy industries. This structure is designed to outperform in a "stagflationary" or low-growth environment, where only companies with genuine competitive advantages can maintain their margins. The heavy tilt toward Healthcare and Staples, combined with a disciplined approach to Tech, reveals an institution that is currently prioritizing the "Return of Capital" as much as the "Return on Capital."

This section shows only part of the complete report. View the app for the full analysis, position-level detail, and quarter-over-quarter tracking.

III. Top 10 Holdings Deep Dive

During the first quarter of 2026, Fundsmith reduced its share count in Marriott by 15.30% . However, despite this reduction, the stock's weight in the portfolio actually increased by 1.38% . This divergence is a critical signal: it indicates that Marriott's stock price significantly outperformed the rest of the portfolio during the quarter. The reduction in shares was likely a tactical "trim" to prevent the position from becoming too dominant, a move known as "pruning the winners." The motivation here is profit-taking at high valuations rather than a fundamental shift in the thesis. Marriott remains the cornerstone of Fundsmith's discretionary exposure, benefiting from the global recovery in business travel and the enduring strength of its Bonvoy loyalty program, which creates a massive competitive moat through customer lock-in.

This section shows only part of the complete report. View the app for the full analysis, position-level detail, and quarter-over-quarter tracking.

IV. Major Buys/Additions

Badger Meter is a leader in flow measurement, control, and communication solutions, primarily for the water industry. The fundamental logic behind this "New Buy" is likely rooted in the global "Smart Water" revolution. As water scarcity becomes a critical macro issue, utilities are increasingly investing in advanced metering infrastructure (AMI) to detect leaks, manage consumption, and improve billing accuracy. Badger Meter possesses the "Quality" characteristics Terry Smith loves: high barriers to entry (long-term utility contracts), a transition toward software-as-a-service (SaaS) through its "EyeOnWater" platform, and a very strong balance sheet.

The addition of BMI and the consolidation into existing winners has slightly shifted the portfolio's risk profile. By reducing the number of holdings and focusing on the most resilient names, Fundsmith has increased its "active share" and its sensitivity to the performance of its top 10. This move has decreased the portfolio's "offensiveness" in a bull market but significantly increased its "defensiveness" for a potential downturn. The institution is essentially saying: "We would rather own more of our best ideas and a tiny bit of a new, high-quality niche player than hold onto mediocre or overvalued positions."

This section shows only part of the complete report. View the app for the full analysis, position-level detail, and quarter-over-quarter tracking.

V. Major Sells and Exits

This suggests that Fundsmith is raising a massive amount of cash. If we aggregate the realized amounts from the top exits and reductions, the institution has retrieved well over $2 billion in capital this quarter. Compared to the measly $21 million spent on the new Badger Meter position, there is a massive net outflow of nearly $2 billion from equity markets. This is a clear "Defensive Posture." Fundsmith is likely preparing for a period of market instability or is anticipating a significant redemption request, though the former is more consistent with Terry Smith’s historical focus on market timing through valuation.

The exit from NIKE (6 years) and Intuit (1 year) shows a willingness to admit when a thesis has changed, regardless of the time horizon. The reduction in Waters Corporation and Stryker (both >10 years) shows that even the most "sacred" holdings are not immune to being sold if the price is right. Fundsmith is proving that its loyalty is to "Quality at a Reasonable Price," not just "Quality" at any price.

This section shows only part of the complete report. View the app for the full analysis, position-level detail, and quarter-over-quarter tracking.

VI. Investment Insights and Risk Warnings

The overarching theme of Fundsmith’s Q1 2026 activity can be summarized as "The Great Quality Rebalancing: Prioritizing Liquidity over Valuation Risk." In a market that has likely been driven by momentum and AI-related euphoria, Terry Smith has executed a disciplined retreat. The logic chain is clear: the institution has identified a disconnect between the "Quality" of its companies and the "Price" the market is currently demanding for them.

This section shows only part of the complete report. View the app for the full analysis, position-level detail, and quarter-over-quarter tracking.

Sources and limitations

This report uses public U.S. Securities and Exchange Commission Form 13F disclosures and structured data maintained by 13F Hub. A 13F filing is a quarter-end snapshot of reportable long positions, is normally published with a delay, and does not disclose every short position, cash balance, bond, derivative, or non-U.S. asset.

Narrative content is prepared from the same-period SEC disclosure and 13F Hub structured data, then checked before publication. This material is for research and education, not personalized investment advice.