3 questions reported in Fundsmith interviews, organised by the group that asks them. Every question carries a model answer and graded feedback on your own attempt.
Questions
Easy · Medium
Hard
Model builds
Built in the spreadsheet grid
Business quality, position sizing, benchmark risk and turnover discipline. 3 questions
Common at benchmark-aware long-only managers assessing whether candidates understand active risk.
Define active share and tracking error. A fund has 85% active share but only 2% expected tracking error. Is that contradictory, and what would you examine before deciding whether the manager is…
Tests your investment philosophy. There is no formula, but there is a right structure.
What makes a business high quality? How would you assess whether a competitive advantage is durable?
The analytical core of fundamental investing. Expect it at quality-focused shops.
Define ROIC and explain how it relates to growth in creating value. When does growth destroy value? How do you decompose ROIC to find out what's actually driving it?
Write your answer, get it graded on technical accuracy, completeness and communication, and see exactly which mechanic you missed.
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