Fundsmith Equity, which has been the largest investment fund in the UK for more than five years, has finally been overtaken by St James’s Place.
St James’s Place’s Polaris 3, one of the funds in the wealth manager’s multi-asset range, became the first in the UK to reach £30bn in assets at the end of last year.
Fundsmith Equity has been the largest UK investment fund since March 2019, after the £19.4bn M&G Optical Income fund transferred the bulk of its assets to Luxembourg as part of Brexit contingency planning.
While Fundsmith has since grown to £22.5bn, St James’s Place’s latest factsheet for Polaris revealed the fund has surged past it to control £30.8bn in assets by the end of December 2024.
This is yet another piece of bad news for Fundsmith manager Terry Smith, after the fund returned just 8.9 per cent in 2024, compared to 20.8 per cent for its benchmark, the MSCI World Index.
This severe underperformance followed a similar trend from previous years, underperforming its index by 4.4 percentage points in 2023, six percentage points in 2022, and 0.8 percentage points in 2021.
In contrast, Polaris 3 has grown 10.7 per cent in the last year, outperforming the wider multi-asset sector by two per cent.
However, comparisons between St James’s Place funds and the wider sector are often difficult due to the wealth manager’s all-inclusive charge that combines advice, platform and fund fees.
St James’s Place’s Polaris range
This is not the first record shattered by Polaris, as in August, it became the largest multi-asset fund range in the country, surpassing Vanguard’s Lifestrategy range of funds.
The overtake came despite a City AM investigation revealing that ISA fees on the Polaris funds averaged a whopping 1.63 per cent a year, with Polaris 3 costing 1.67 per cent a year.
This is on top of an initial five per cent entry fee charge, though this would not apply to existing St James’s Place customers who transferred into Polaris.
“For new clients, they would receive a full initial review with their SJP adviser, which includes developing a personal financial plan that helps them build a well-diversified portfolio to achieve their long-term goals,” said an SJP spokesperson at the time.
Even when stripping out the 0.5 per cent that St James’s Place charges for advice, fees still averaged 1.09 across the funds.
Fundsmith currently charges 1.04 per cent, which is also reaching the maximum charged by investment funds in the UK.