Fundsmith, the investments firm founded by Terry Smith, chief executive of broker Tullet Prebon, reduced its losses by nearly 80% to £327,000 during its last financial year, suggesting the vocal critic of the funds industry is on course to prove his mettle as an asset manager.

The firm, founded in April 2010 amid much public criticism by Smith of the asset-mangement industry, operates just one fund. This is a concentrated 20-30 stock equity portfolio run on a low-turnover, "buy-and-hold" approach, which has now reached £840m under management.