城市访谈：Fundsmith老板特里·史密斯直面失职银行家（《每日邮报》/《这是金钱》）

CITY INTERVIEWHe fought his way out of the East End to become City grandee, now Terry Smith is squaring up to errant bankers

By Ben Griffiths for the Daily Mail

Published: 17:25 EDT, 4 July 2012 | Updated: 09:15 EDT, 5 July 2012

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No one could ever accuse Terry Smith of being a yes-man. The boss of asset management firm Fundsmith is a natural upstart who has forged a career in the City by being a maverick.

His contrarian views have thrust him into the spotlight since his early days in the Square Mile.

Smith built a reputation during the 1980s as the City’s leading banks analyst and when at stock broker BZW he suddenly leapt to fame when he issued a sell note on Barclays – the broker’s parent company.

Unapologetic: Terry Smith first leapt to fame when he issued a sell note on Barclays, his employer at the time

Smith, the son of a lorry driver who grew up in the East End, started his financial career in 1974 with the bank which suddenly finds itself in crisis amid the scandal about fixing inter-bank interest rates.

An appearance on the BBC’s Question Time last week saw Smith turn in a suprisingly measured performance from a normally pugnacious figure. Tullett Prebon, the inter-dealer broker of which he is chief executive, has also been caught up in the Libor scandal.

Although there is no suggestion Tullett has done anything wrong and the firm is not under investigation, it has been asked to supply information to the authorities as part of the wider probe.

Clearly invited on to the programme as a suitable lightning rod for hostility towards bankers and the City, Smith lambasted an industry that has come to be defined by its greed and avarice.

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Speaking after Bob Diamond suddenly quit Barclays earlier this week, Smith said: ‘Banks clearly do not have any integrity left and criminal proceedings should be instituted against those who manipulated Libor.

‘It is right that those at the top of Barclays have taken responsibility. However, the fundamental question that must be answered is how to change the culture of the banking industry.

War hero: Sir Keith Park

‘Since 2008 I have said that retail and investment banking need to be split. Surely this latest scandal makes that unarguable.

‘If you put a fox in charge of a hen coop don’t be surprised by the outcome.’ It is a view certain to niggle many in the Square Mile.

These days he has managed to shrug off his reputation as a City bruiser. Some of those who have worked with him previously describe the experience as the toughest in their careers.

He’s never been one to dodge a fight – both during working hours and in his leisure time.

A well-known white collar boxing fan, he also fought relentlessly to get a London memorial erected for New Zealander Sir Keith Park, the commander of RAF Fighter Command’s 11 Group during the Battle of Britain which protected the capital from Nazi bombers in 1940.

The statue was finally unveiled on the fourth plinth in Trafalgar Square amid much fanfare and then moved to the Air Force Museum in Hendon. Smith was later made a Member of Merit for services to New Zealand-UK relations in recognition of his efforts.

His study of history and experience of flying – he’s an accomplished pilot of aeroplanes and helicopters – motivated the campaign, but also the desire to get proper recognition for a man who was later dumped by the RAF high command once the Battle of Britain had been won.

Perhaps his love of the air influenced the decision to base his new venture, asset management firm Fundsmith, high within an office block in the West End.

With panoramic views of the London skyline it’s easy to imagine setting off on an aerial adventure over the far horizon.

Terry Smith, leader of 'The Sir Keith Park Memorial Campaign', as he campaigned to place a statue of Sir Keith on the fourth plinth in Trafalgar Square.

Back inside the offices, Fundsmith displays cases packed with the many small, everyday consumable items made by the 26 global companies the fund is invested in. Condoms, syringes, shampoos and baby food. All are high turnover items that are manufactured in the thousands by well-established corporate giants.

The firm had £440million of funds under management. Its first year target was £250million so it’s doing well – and all with next to no publicity. It has refused to advertise, ignoring doubters who said the only way to build a new funds business was a big media campaign.

It’s another example of his unconventional approach. But the way in which he’s really broken the mould of fund management is on Fundsmith’s fees. There is no upfront charge and the annual management fee is a flat 1 per cent.

Early days: Stockbroker Terry Smith in 1996

In contrast with many fund managers, Smith insists his employees focus on just 65 global companies and the fund is currently only invested in 26 which it knows intimately. It’s a formula that has seen the fund grow since inception by 21.3 per cent when the wider market rose 4.9 per cent.

Analysts at Killik & Co rate the fund as ‘a good, cost effective way to gain access to a high quality portfolio of global equities’. Also of merit is the fact that Smith’s own wealth is invested via the fund he himself manages.

In essence Fundsmith, Smith says, is a very simple proposition.

‘We endeavour to buy very good companies. We try not to overpay. And then we endeavour to do nothing. We endeavour to sit on our hands and let those really good returns those companies produce get to the end investor without any additional cost of dealing.

Among its top ten holdings are Unilever, L’Oreal, Pepsico, Microsoft and Serco. All could be considered consistent performers with strong cash flows.

‘We are not trying to buy a company hoping the share price will go up and then sell it to somebody who will pay more. We actually want to own those shares indefinitely. So we try and buy good companies.’

That can be a challenge given current market conditions, with the eurozone debt crisis weighing heavy on most global businesses. Smith believes the euro will almost certainly break apart.

‘The only way to stop that would be if they formed a federal authority which could issue bonds and tax the underlying countries to support them,’ he says, ‘and a central banking authority which could both support the banking sector and regulate it. And if Germany accepts that it will be through these mechanisms, making transfer payments to the periphery forever.

‘I think that’s probably unacceptable and the eurozone will therefore break apart. I don’t think that’s a bad thing.

‘History is littered with currency unions coming apart without disastrous consequences and I think a lot of the things people fear, like defaults and so on, are usually quite good. Washing the beach clean. Constructive destruction, as it were, is what capitalism is all about.’

Closer to home, Smith believes economic growth can’t dig the UK government out of its current predicament.

‘We were never going to get growth on the scale we’ve had in the last 20 years because it was partly debt-driven.

‘At some point there’s going to be a terrible reckoning in the UK. And I think there will have to be real cuts in public spending to correct that.’

Unapologetically pessimistic, Smith concludes the interview by saying he hopes he’s wrong and that some economic miracle will rescue the situation.

For now his investors can take comfort in the fact Fundsmith continues to outperform the wider market.