What your fund’s top 10 holdings don’t tell you
For all their talk of investing for the long run, active fund managers like to trade.
Take Terry Smith for example, whose flagship Fundsmith Equity fund reported portfolio turnover of 51.8% in the first half of 2026. In his mid-year letter to shareholders, Smith said the fund had started building positions in 12 companies while exiting, or starting to exit, 13 others. For a fund whose investment mantra ends with “do nothing”, that’s a lot of activity.
For investors in active funds, keeping tabs on what they own can be a challenge.
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The latest Fundsmith Equity factsheet (31 July) lists only its top 10 holdings. It also says that, while a position is being built, the company name may be withheld until the intended weighting has been accumulated. That’s a reasonable trading precaution, but another reason why monthly factsheets can be far from comprehensive.
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A top 10 list is useful, but it’s more like the signature dishes on a restaurant menu than an inventory of the kitchen. A fund can change materially beyond those 10 names, especially if several smaller positions are being added or sold.
While many funds only highlight their top 10, because in most cases these are the largest holdings, should investors be given more information to understand the risks and strengths in their portfolio?
Fund holdings: What the rules require
There’s no law spelling out exactly what investment funds must disclose about their holdings. But the Financial Conduct Authority (FCA) requires funds to follow the Investment Association’s Standard Rules of Practice. These demand a full portfolio statement, listing every investment asset and liability, in the annual and half-yearly long reports behind the headline factsheet.
Some asset types have separate presentation rules, but the principle is the same.
The catch is timing. Annual reports can be published up to four months after year-end and half-yearly reports up to two months after the half-year. Because the snapshots are six months apart, the latest complete picture can be nearly 10 months out of date by the time the annual report deadline arrives.
But for investors, knowing more can avoid over-concentration and better understand their market exposure. But are they always useful?
The top 10 is a convention, not a rule
If you want to see a fund’s 10 largest holdings, the latest factsheet is generally easy to find. But if you want more than the top 10, then that may not be so easy to find.
Publishing just the top 10 is not because of the regulator. The FCA doesn’t require a monthly factsheet at all, let alone prescribe the top 10 format funds use when they publish one. Publishing the top 10 is an industry convention, not a regulatory judgement about how much investors need to see.
Anything beyond those 10 holdings sits in the fund’s long report, which must list every investment asset and liability. It takes more digging to find than a factsheet, but that’s where the full picture sits.
That full list can reveal changes the top 10 misses. It can show whether the manager’s stated process is still visible in the portfolio, whether concentration has shifted and whether several funds you own increasingly hold the same companies. Smaller positions can also expose sector, country or company-type bets that the headline names miss.
Having the ability to see the full portfolio doesn’t mean every new holding deserves an inquest. Active managers are paid to make decisions, and investors who second-guess every trade can create problems of their own.
But while questioning every individual trade is one thing, checking whether the fund still resembles the one you chose is another.
Funds transparency
Greater transparency is usually seen as a good thing. But it has its downsides. If, for instance, a manager reveals an unfinished trade too quickly, other investors can trade ahead of it, copy the idea or push the price against the fund.
The academic evidence points to a trade-off, not a simple case for more disclosure. Parida and Teo (2018) studied US mutual funds that moved from semi-annual to quarterly disclosure after the 2004 SEC rule. Funds that had performed well under the old regime subsequently lost about 22.5 basis points, or 0.225 percentage points, the following month. The effect was particularly pronounced among funds holding illiquid portfolios.
Other research identifies further drawbacks. Agarwal et al. (2015) found that mandatory portfolio disclosure could improve stock liquidity, but at a performance cost for some funds. Xin, Yeung and Zhang (2024) linked more frequent reporting to window dressing: reshuffling a portfolio just before it is due to be seen. These are both US studies, and neither directly shows what monthly disclosure of near-current holdings would do to UK funds.
Full transparency can give investors a false sense of security. Woodford Investment Management published the full portfolio of the Woodford Equity Income Fund from its launch in 2014 and was widely praised for doing so. But after prolonged disastrous performance, the fund was suspended in 2019 and closed soon after.
Full holdings are still useful as they can show unusual or unquoted positions and prompt harder questions than a headline list ever could.
What they can’t tell investors is how easily assets could be sold into redemptions, how uncertain valuations were or whether governance would hold up under pressure. Transparency can sharpen due diligence, but it cannot replace it.
How to check fund holdings
To see what’s in your fund, you may have to do the homework yourself. Begin on the manager’s website. If there’s no spreadsheet or report, find the latest annual or half-yearly report and search for “portfolio statement”.
If it’s hard to find, don’t read too much into that. Treat it as an information disadvantage, not evidence of bad management or an automatic sell signal.
Once you have the full portfolio, check both the holdings date and the publication date. They can be months apart.
Then compare the latest complete portfolio with the previous one. Look for new and exited positions, changes in concentration, shifts in sector or geographic exposure and growing overlap across funds. You are looking for material change, not trying to reverse-engineer every trade.
Investors need enough visibility to spot material change; managers need enough delay to finish trading without being front-run. Making a recent, complete portfolio easy to find is a reasonable place to start.
