⚠️ Major Portfolio Transformation
Q3 2025 marks a dramatic strategic shift in Fundsmith’s portfolio. Terry Smith executed massive reductions in mega-cap technology holdings Meta (-56%) and Microsoft (-48%), while healthcare stocks Stryker and IDEXX Laboratories ascended to the top two positions. This represents one of the most significant portfolio rebalancing events in Fundsmith’s history.
As of Q3 2025, Terry Smith’s Fundsmith portfolio reflects a fundamental restructuring that prioritizes healthcare and specialized software over mega-cap technology. The portfolio now values at $19.8 billion across 35 positions, with medical device and diagnostic leaders claiming the top spots. The quarter saw unprecedented selling in big tech, balanced by aggressive expansion in software specialists and selective new positions in consumer health and healthcare technology. This transformation suggests a deliberate pivot toward more defensive, cash-generative businesses with sustainable competitive moats.
1
SYK
Stryker Corp.
Reduced 1.83%
Portfolio: 8.57%
Shares: 4,591,293
Reported Price: $369.67
Value: $1,697,263,283
Stryker ascended to the #1 position in Q3 after only a minimal 1.83% reduction (-85,714 shares). The medical device and orthopedic equipment leader’s promotion to top holding signals Terry Smith’s increased conviction in defensive healthcare plays. Stryker’s diverse product portfolio, aging demographics tailwind, and consistent innovation make it an ideal core holding in the transformed portfolio.
2
IDXX
IDEXX Laboratories
Reduced 1.09%
Portfolio: 8.43%
Shares: 2,610,457
Reported Price: $638.89
Value: $1,667,794,873
IDEXX Laboratories claimed the #2 spot with only a trivial 1.09% reduction (-28,832 shares), reflecting Terry Smith’s unwavering conviction in veterinary diagnostics. The company’s recession-resistant business model, growing pet healthcare spending, and dominant market position make it an ideal defensive growth holding. IDEXX’s elevation to a top-two position underscores the strategic shift toward predictable, high-quality cash flows.
3
GOOGL
Alphabet Inc.
Reduced 7.56%
Portfolio: 7.72%
Shares: 6,289,352
Reported Price: $243.10
Value: $1,528,941,471
Alphabet experienced a significant 7.56% reduction (-514,102 shares) but maintains the #3 position as the portfolio’s largest remaining mega-cap tech holding. Google’s dominance in search advertising, cloud computing growth, and AI capabilities preserve its strategic importance despite the broader tech de-risking. The company represents Terry Smith’s continued belief in select large-cap technology franchises.
4
MSFT
Microsoft Corp.
Massive Reduction 47.72%
Portfolio: 6.76%
Shares: 2,583,369
Reported Price: $517.95
Value: $1,338,055,974
Microsoft suffered a dramatic 47.72% reduction (-2,358,140 shares), representing one of the quarter’s most significant moves. The former #2 holding was nearly halved, dropping to #4 as Terry Smith dramatically de-risked his mega-cap technology exposure. Despite remaining a meaningful holding, this massive trim signals concerns about valuation or a strategic preference for more specialized, defensive businesses over large-cap tech giants.
5
V
Visa Inc.
Effectively Unchanged +0.01%
Portfolio: 6.65%
Shares: 3,854,336
Reported Price: $341.38
Value: $1,315,793,224
Visa remained essentially unchanged with a negligible 0.01% increase (+265 shares), demonstrating Terry Smith’s continued conviction in the payments network. As other major positions were aggressively trimmed, Visa’s stability stands out. The global shift to digital payments and Visa’s toll-booth business model continue to make it a core holding representing high-quality, recurring revenue streams.
6
ADP
Automatic Data Processing
Reduced 1.16%
Portfolio: 6.39%
Shares: 4,311,603
Reported Price: $293.50
Value: $1,265,455,481
ADP experienced a minimal 1.16% reduction (-50,496 shares), maintaining its position as a substantial business services holding. The company’s dominance in payroll processing, with high switching costs and recession-resistant recurring revenues, aligns perfectly with Fundsmith’s quality focus. ADP’s stability amid the broader portfolio reshuffling reflects its defensive characteristics.
7
WAT
Waters Corp.
Increased 9.62%
Portfolio: 5.99%
Shares: 3,955,498
Reported Price: $299.81
Value: $1,185,897,855
Waters Corporation saw a meaningful 9.62% increase (+347,091 shares), bucking the trend of broad portfolio trimming. The analytical instruments specialist’s expansion signals growing conviction in specialized healthcare technology. Waters’ essential role in pharmaceutical research, food safety testing, and laboratory analysis provides defensive growth characteristics that align with the portfolio’s strategic shift.
8
PM
Philip Morris International
Reduced 20.78%
Portfolio: 5.89%
Shares: 7,188,144
Reported Price: $162.20
Value: $1,165,916,957
Philip Morris continued its downward trajectory with a substantial 20.78% reduction (-1,886,051 shares), the second consecutive quarter of aggressive trimming. Despite the significant cuts, the tobacco company’s transformation toward reduced-risk products and strong cash generation keeps it as a meaningful consumer staples position. The ongoing reduction suggests profit-taking after strong performance.
9
META
Meta Platforms Inc.
Massive Reduction 56.32%
Portfolio: 5.78%
Shares: 1,558,664
Reported Price: $734.38
Value: $1,144,651,668
Meta Platforms experienced the quarter’s most dramatic reduction, plummeting 56.32% (-2,010,088 shares) and falling from the #1 position to #9. This represents a wholesale de-risking of the former largest holding, cutting the position by more than half. The massive trim suggests either profit-taking after exceptional gains, valuation concerns, or a strategic pivot away from advertising-dependent mega-cap technology. Meta’s demotion marks a historic shift in Fundsmith’s portfolio composition.
10
MAR
Marriott International
Minimal Change -0.20%
Portfolio: 5.56%
Shares: 4,228,298
Reported Price: $260.44
Value: $1,101,217,931
Marriott International remained virtually unchanged with only a 0.20% reduction (-8,301 shares), maintaining its position as a core consumer discretionary holding. The global hospitality leader’s asset-light franchise model and consistent cash generation continue to provide attractive characteristics. Marriott’s stability amid dramatic portfolio changes reflects confidence in the sustained travel recovery.
1
Historic Big Tech Exit and Healthcare Ascendancy
Q3 2025 witnessed Fundsmith’s most dramatic portfolio transformation in recent memory. Meta was slashed by 56.32% (-2.01 million shares) and Microsoft by 47.72% (-2.36 million shares), representing a combined reduction of over $2 billion in value. Simultaneously, healthcare stocks Stryker and IDEXX Laboratories ascended to the top two positions, each near 8.5% of the portfolio. This seismic shift signals Terry Smith’s deliberate pivot away from advertising and software giants toward defensive, cash-generative healthcare businesses with predictable growth trajectories and strong competitive moats.
2
Aggressive Expansion in Specialized Software
While mega-cap tech was decimated, specialized software companies saw explosive growth. NAPCO Security surged 86.39% (+824,945 shares), Intuit jumped 64.01% (+235,916 shares), Paycom grew 26.58% (+109,923 shares), and Qualys expanded 21.19% (+152,257 shares). This pattern reveals a clear preference for niche software leaders with subscription models, high switching costs, and dominant positions in specialized markets over generalist technology giants. Terry Smith is essentially replacing mega-cap tech exposure with focused software specialists that offer better pricing power and stickier customer relationships.
3
Continued Animal Health and Specialty Pharma Conviction
Zoetis saw a robust 25.32% increase (+730,300 shares) to reach 2.67% of the portfolio, while Catalyst Pharmaceuticals grew 24.17% (+654,721 shares). Combined with IDEXX‘s elevation to the #2 position, these moves demonstrate Terry Smith’s conviction that animal health and specialty pharmaceuticals offer defensive growth characteristics. The pet healthcare trend remains secular and recession-resistant, while specialty pharma provides focused exposure to niche treatments without the binary risks of large pharmaceutical development pipelines.
4
Strategic New Positions in Consumer Health and Healthcare Tech
Three new positions emerged in Q3: Clorox (0.38%), Doximity (0.50%), and Oddity Tech (0.45%). These additions reflect diversification into consumer staples and healthcare technology. Clorox provides defensive consumer exposure with pricing power, Doximity offers a unique healthcare professional network with high margins, and Oddity Tech represents beauty-tech innovation. These targeted additions suggest Terry Smith is finding quality opportunities in overlooked corners of consumer and healthcare markets.
15
NSSC
NAPCO Security Technologies
Massive Increase 86.39%
Portfolio: 0.39%
Shares: 1,779,857
Value: $76,444,858
NAPCO Security saw the quarter’s largest percentage increase at 86.39% (+824,945 shares), nearly doubling the position size. The commercial and residential security solutions provider benefits from recurring monitoring revenues and growing security infrastructure spending. This aggressive expansion suggests Terry Smith sees significant potential in this niche technology leader.
11
INTU
Intuit Inc.
Massive Increase 64.01%
Portfolio: 2.09%
Shares: 604,456
Value: $412,789,047
Intuit experienced another quarter of explosive growth with a 64.01% increase (+235,916 shares), following last quarter’s massive expansion. The financial software leader’s QuickBooks and TurboTax franchises exemplify high-switching-cost businesses with predictable recurring revenues. This continued aggressive buying makes Intuit one of the portfolio’s fastest-growing positions and a core software holding.
19
PAYC
Paycom Software
Increased 26.58%
Portfolio: 0.55%
Shares: 523,433
Value: $108,947,345
Paycom expanded by 26.58% (+109,923 shares), demonstrating increased conviction in the HR software specialist. The company’s single-database architecture and employee self-service model create strong competitive advantages. This expansion aligns with the broader strategy of building positions in specialized software companies with recurring revenue models.
14
ZTS
Zoetis Inc.
Increased 25.32%
Portfolio: 2.67%
Shares: 3,615,131
Value: $528,965,968
Zoetis sustained its upward momentum with a 25.32% increase (+730,300 shares), the third consecutive quarter of significant expansion. The animal health leader’s dominant market position, growing pet ownership trends, and livestock health spending create a powerful defensive growth story. This continued aggressive buying establishes Zoetis as a core healthcare holding.
24
CPRX
Catalyst Pharmaceuticals
Increased 24.17%
Portfolio: 0.33%
Shares: 3,363,807
Value: $66,266,998
Catalyst Pharmaceuticals grew 24.17% (+654,721 shares) for the second consecutive quarter, demonstrating sustained conviction in this specialty pharmaceutical company. Focused on rare neurological diseases, Catalyst offers targeted exposure to high-margin niche treatments without the development risks of broader pharmaceutical companies.
20
QLYS
Qualys Inc.
Increased 21.19%
Portfolio: 0.58%
Shares: 870,859
Value: $115,240,771
Qualys expanded by 21.19% (+152,257 shares), joining the growing roster of specialized software holdings. The cybersecurity and compliance platform provider benefits from increasing regulatory requirements and cyber threats. This expansion reflects recognition that security software has become mission-critical infrastructure with strong recurring revenue characteristics.
25
CLX
Clorox Company
New Position
Portfolio: 0.38%
Shares: 613,497
Value: $75,644,180
Clorox represents a new position in defensive consumer staples. The household products company’s portfolio of trusted brands, pricing power, and essential product categories align with Fundsmith’s quality focus. This addition suggests Terry Smith sees value in established consumer franchises with inflation-resistant characteristics.
21
DOCS
Doximity Inc.
New Position
Portfolio: 0.50%
Shares: 1,355,944
Value: $99,187,304
Doximity is a new position in healthcare technology, representing a professional network for physicians. The company’s unique position connecting medical professionals with high engagement, strong network effects, and high-margin business model make it an attractive addition to the healthcare-focused portfolio.
22
ODD
Oddity Tech Ltd.
New Position
Portfolio: 0.45%
Shares: 1,416,956
Value: $88,276,359
Oddity Tech represents a new position in beauty technology and consumer innovation. The company’s data-driven approach to beauty products and direct-to-consumer model create differentiation in the competitive beauty market. This addition demonstrates willingness to invest in innovative consumer brands with technology-enabled advantages.
Q3 2025 marks the most transformative quarter in Fundsmith’s recent history, with Terry Smith executing a fundamental restructuring that prioritizes healthcare and specialized software over mega-cap technology. The wholesale reduction of Meta (-56%) and Microsoft (-48%) represents a combined exit of approximately $2.5 billion in big tech exposure, while Stryker and IDEXX Laboratories ascended to become the portfolio’s dual pillars at over 8% each.
This strategic pivot reveals Terry Smith’s evolving investment thesis: rather than betting on advertising-dependent and increasingly competitive mega-cap platforms, he’s concentrating on businesses with defensive growth characteristics, pricing power, and predictable cash flows. The aggressive expansion in specialized software—NAPCO Security (+86%), Intuit (+64%), Paycom (+27%), and Qualys (+21%)—demonstrates that technology exposure is being rebuilt through niche leaders with subscription models and high switching costs rather than generalist giants.
The continued conviction in animal health through Zoetis (+25%) and IDEXX, combined with specialty pharmaceuticals like Catalyst (+24%), reinforces the defensive growth theme. New positions in Clorox, Doximity, and Oddity Tech suggest Terry Smith is finding opportunities in consumer staples and healthcare technology that offer quality characteristics at reasonable valuations. The portfolio’s reduced concentration (down from $23B to $19.8B) alongside these strategic shifts indicates deliberate risk management—realizing gains from high-flyers while repositioning toward more sustainable, less cyclical businesses. This transformation positions Fundsmith for a potentially more defensive environment while maintaining exposure to quality growth through carefully selected specialists rather than market megacaps.
