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 Unilever PLC (NYSE:UL). Unilever PLC (NYSE:UL) is a British consumer goods giant, selling products that span food homecare, beauty and personal care brands. On July 31, 2026, Unilever PLC (NYSE:UL) closed at $63.41 per share, reflecting a market capitalization of $4.35 billion. Unilever PLC (NYSE:UL) posted a one-month return of 2.97%, while its shares lost 1.62% over the past 52 weeks.
Fundsmith Equity Fund stated the following regarding Unilever PLC (NYSE:UL) in its Q2 2026 investor update:
“Unilever PLC (NYSE:UL) – When Hein Schumacher was appointed as CEO we breathed a sigh of relief after the Polman/Jope years of woke. He said he had no intention of indulging in acquisitions or divestments until he had got all the businesses producing the results they should be capable of benchmarked against the best of their competition. We applauded that approach.
After 18 months he was fired and the CFO Fernando Fernandez was appointed as CEO. We thought Fernandes was very capable both as an operating manager and a CFO. However, his appointment was swiftly followed by the spin out of the ice cream business as the Magnum Ice Cream Company allegedly because its separate distribution chain did not fit with the rest of Unilever. At the time we asked if that was all the disposals for the foreseeable future and were told it was. This was then followed by the announcement of the intention to transfer the remainder of the food business to McCormick…” (Click here to read the full text)
Unilever PLC (NYSE:UL) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 34 hedge fund portfolios held Unilever PLC (NYSE:UL) at the end of the first quarter, up from 28 in the previous quarter. While we acknowledge the risk and potential of Unilever PLC (NYSE:UL) 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 Unilever PLC (NYSE:UL) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Unilever PLC (NYSE:UL) and shared a bullish thesis on the company. 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.
