ETFT brings Terry Smith's concentrated quality growth approach to the ETF wrapper — owning 20-30 exceptional businesses trading at reasonable valuations. This is Fundsmith's flagship strategy that has crushed the MSCI World by 6% annually since 2010, now accessible without the hedge fund minimums.
How It Works
The fund runs an ultra-concentrated portfolio of dominant companies with pricing power, high returns on capital, and fortress balance sheets. Unlike typical quality ETFs that hold 100+ names, ETFT mirrors Smith's actual hedge fund holdings — think Microsoft, L'Oréal, and Novo Nordisk. The portfolio turns over just 15% annually, letting winners compound while avoiding the tax drag of hyperactive trading.
Key Features
- Access to Terry Smith's actual hedge fund portfolio at ETF pricing instead of 1% management fees
- Extreme concentration in 20-30 names means each position actually moves the needle
- Zero exposure to banks, commodities, or utilities — pure quality growth compounders only
Risks
- Concentration risk is real — a 5% position blowing up means a 5% portfolio hit, not 0.5%
- Quality growth can underperform for years when value rotates back — see 2022's 20% drawdown
- New ETF with zero track record and minimal assets could face liquidity issues or closure risk
Who Should Own This
Perfect for investors who want concentrated exposure to the world's best businesses but can't meet Fundsmith's $10M minimums. Works as a core equity holding for those comfortable with volatility, or as a 10-20% satellite to juice returns in a diversified portfolio. Skip this if you need income or can't stomach seeing 30% of your equity allocation in just five stocks.