Terry Smith, one of the UK’s best-known fund managers, has once again defended the performance of his blockbuster investment fund, which last year failed to beat one of its main benchmarks as he missed out on growth in the so-called Magnificent Seven stocks.

In his annual letter to investors in the £23.7bn Fundsmith Equity fund, published on 9 January, Smith urged investors to take a “longer-term perspective” after its 12.4% gains fell short of the 16.8% return posted by the MSCI World index.