We noticed recently that the largest fund in the UK wholesale market, Fundsmith Equity, has now underperformed relative to its sector over the past five years to October 20.

The £23bn fund has not outperformed its sector on a discrete calendar year basis since 2021.

The deficit on a cumulative five-year basis is a small one - 0.78 per cent - but we thought it worth having a look at how the decline is viewed by allocators, given the strategy has for some time been the most popular global equity fund among the portfolios we cover.

That remains the case with the fund appearing in nine portfolios. Any performance issues have not resulted in DFMs heading for the exit, indeed two new buyers have come on board over the past 12 months. 

One of those is Canaccord Genuity Wealth Management, which bought into the fund towards the end of 2023.

Canaccord's head of fund research Kamal Warraich said: “The fund maintains a very high active share, so is highly differentiated from the index. Investors should expect prolonged periods of differentiated performance. The focus on high quality hallmarks, high return on invested capital and earnings consistency, has meant the fund has increasingly concentrated into specific areas like consumer franchises and healthcare names.

"Whilst there is meaningful exposure to technology, the fund is underweight the magnificent seven. These factors have led to relative underperformance during both the post-Covid value rally and the subsequent AI rally. Fundamentals remain sound and we view the fund as a building block within a portfolio, where it can aid with generating profitability and strong risk-adjusted returns."

Which leaves anyone reliant on Fundsmith Equity hoping for the AI bubble to pop. Which must happen eventually, surely? Right?