Fundsmith Equity Fund's Strategic Divestment of Intuit (INTU) in Q2 2026

by : Chika Uwazie
Fundsmith Equity Fund, a prominent investment management entity based in London, recently issued its investor letter for the second quarter of 2026. This letter detailed the fund's performance and strategic adjustments amidst a dynamic market environment, particularly addressing its decision to sell off its holdings in Intuit Inc.

Navigating Market Currents: Fundsmith's Strategic Response to Underperformance

Q2 2026 Performance and Market Dynamics

During the first half of 2026, the Fundsmith Equity Fund experienced a return of -2.9%. This performance notably lagged behind the MSCI World Index by 14.1 percentage points. The underperformance was primarily attributed to a market heavily influenced by momentum trading, the rise of passive index funds, and an overall excitement surrounding artificial intelligence.

Shifting Investment Approach

The firm acknowledged the evolving landscape where index funds increasingly exhibit characteristics of active funds due to their concentrated holdings in specific sectors and equities. In response to heightened market volatility and a substantial 51% portfolio turnover, Fundsmith announced a move towards a more active investment strategy. This approach aims to incorporate market momentum while adhering to its core investment principles: investing in high-quality companies, avoiding overvaluation, and maintaining a disciplined, long-term perspective.

Intuit Inc. (INTU): A Detailed Review

Fundsmith's Q2 2026 investor letter specifically addressed its decision concerning Intuit Inc. (NASDAQ: INTU). Intuit, a financial software provider offering solutions in financial management, payments, compliance, and marketing, closed at $316.07 per share on July 31, 2026, with a market capitalization of $86.46 billion. Despite a recent one-month return of 16.14%, Intuit's shares had declined by 59.73% over the preceding 52 weeks.

Rationale Behind Divesting from Intuit

The Fundsmith Equity Fund elucidated its rationale for selling Intuit shares, citing concerns over the company's reaction to its acquisition of Mailchimp. The fund highlighted that Intuit's ongoing efforts to present results excluding Mailchimp demonstrated the acquisition's poor performance and suggested a continued state of denial within Intuit's management. This observation was particularly impactful as issues related to the Mailchimp acquisition were the initial drivers for Fundsmith's previous divestment from Intuit.

Alternative Investment Opportunities

While Intuit Inc. did not feature on Fundsmith's list of the 40 most popular stocks among hedge funds, with 92 hedge funds holding positions in Q1, Fundsmith believes that certain AI stocks offer superior upside potential with reduced downside risks. The firm recommends exploring undervalued AI stocks that are poised to benefit significantly from emerging economic trends such as Trump-era tariffs and the onshoring of industries.

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