Fundsmith, an investment management firm based in London, has released its second-quarter 2026 investor letter for its “Fundsmith Equity Fund.” A copy of the letter can be downloaded here. The Fund returned -2.9% in the first half of 2026, underperforming the MSCI World Index by 14.1 percentage points, driven by challenges from a momentum-driven market dominated by passive index funds and AI-related exuberance. The letter discusses the rise of passive investing, noting that index funds now resemble active funds, concentrating heavily in a few sectors and stocks. Due to increased market volatility and a 51% portfolio turnover in the first half of the year, the firm plans to adopt a more active approach, incorporating momentum while maintaining its core mantra: buy good companies, don’t overpay, and do little. In addition, please check the Firm’s top five holdings to know its best picks in 2026.
In its Q2 2026 investor letter, Fundsmith Equity Fund highlighted GE Vernova Inc. (NYSE:GEV) as a newly added position. GE Vernova Inc. (NYSE:GEV) is a leading energy company that offers various products and services that generate, transfer, orchestrate, convert, and store electricity. On July 31, 2026, GE Vernova Inc. (NYSE:GEV) closed at $990.29 per share, reflecting a market capitalization of $263.74 billion. GE Vernova Inc. (NYSE:GEV) posted a one-month return of -14.04%, while its shares gained 49.42% over the past 52 weeks.
Fundsmith Equity Fund stated the following regarding GE Vernova Inc. (NYSE:GEV) in its Q2 2026 investor update:
“GE Vernova Inc. (NYSE:GEV) – GE Vernova builds and services the gas turbines and electrical grid equipment that power the modern world. Its competitive ‘moat’ stems from the scale and high switching costs of energy infrastructure: once its turbines are installed, customers are locked into high-margin, inflation-protected service contracts for decades. Unlike elevators and escalators, these generators cannot be serviced by independent providers because all the technology and materials are proprietary. GE Vernova’s equipment generates approximately a third of the world’s total electricity. Future growth depends on upgrading ageing power grids to handle the high voltages needed to deliver power from where it is produced to where it is needed, and on increasingly ‘behind-the-meter’ power generation at AI data centres. That growth is also fairly predictable as the current order backlog is $163bn (4x 2025 revenues). They are also the global leader in small modular nuclear reactors (SMRs). They currently have the only commercial SMR project (BWRX-300) under construction in the Western world, with the first deployment in Canada expected to be finished by 2030. ROIC: ~20% but rising rapidly, FCF yield: 2.6%.”
GE Vernova Inc. (NYSE:GEV) ranks 29 on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 118 hedge fund portfolios held GE Vernova Inc. (NYSE:GEV) at the end of the first quarter, up from 115 in the previous quarter. While we acknowledge the risk and potential of GE Vernova Inc. (NYSE:GEV) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than GE Vernova Inc. (NYSE:GEV) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered GE Vernova Inc. (NYSE:GEV) and shared the list of best electrical equipment stocks to buy. In addition, please check out our hedge fund investor letters Q2 2026 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
