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Fundsmith crowned UK's biggest fund on M&G's Brexit transfer

Fundsmith crowned UK's biggest fund on M&G's Brexit transfer

Citywire AA-rated Terry Smith's Fundsmith Equity fund will this week become the largest in the UK, gaining the crown from M&G Optimal Income, which will begin transferring the bulk of its assets to Luxembourg tomorrow.

Fundsmith's assets hit £17.5 billion last month, as investors have continued to pour money into his top-performing fund.

Last August Terry Smith's fund overtook Standard Life Aberdeen's Global Absolute Return Strategies in the assets league table, as the once £27 billion fund continues to haemorrhage assets.

Only the £19.4 billion M&G Optimal Income fund is now bigger than Fundsmith. But Richard Woolnough's giant bond fund will dramatically shrink in size as M&G transfers the bulk of its assets to an equivalent fund in Luxembourg, starting from tomorrow.

M&G is conducting the transfer as part of its Brexit contingency planning. Since October, the fund group has transferred money held by non-UK investors in 20 funds over to Luxembourg versions of the same strategies run by the same managers.

Only the largest of the funds subjected to these changes, M&G Optimal Income remains. Dealing will be suspended tomorrow as the assets held by the majority of non-UK investors who hold the fund are transferred to the M&G (Lux) Optimal Income fund. Dealing will resume on Tuesday.

That will take the total M&G has sent to Luxembourg to over £30 billion under the changes, which M&G said were to 'protect the interest of M&G's customers outside the UK as the country negotiates its exit from the European Union'.

Fundsmith Equity's crowning as the UK's largest fund has been achieved in a relatively short space of time. Former stockbroking boss Smith launched the fund less than nine years ago, with a pledge to shake up the 'broken' fund management industry.

His fund has consistently topped the sales charts, as investors have flocked to a strategy that has returned more than any other in the Investment Association's Global sector since its 2010 launch.

Over that period, Fundsmith is up 308%, well ahead of the next best returning fund in the sector, Old Mutual Global Equity, up 217%. 

But its worth noting that Fundsmith's clearest rival, Lindsell Train Global Equity, launched just four months later. 

Since Citywire AA-rated Nick Train and Michael Lindsell began running that fund, they have delivered 273%, just behind Fundsmith's 299% over the same period.

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