Veteran city investor Terry Smith’s newly launched Fundsmith Equity Fund is set to target individual savings account (ISA) investors ahead of the tax-year end, What Investment has learnt.

A campaign for the ISA season has not yet been finalised but is expected in the coming months as the deadline for ISA allowances on 5 April fast approaches.

Fundsmith currently offers investment through ISAs on its website, with a 1 per cent annual management charge for direct investors – or 1.5 per cent through advisers.

The fund has attracted £51.8 million (at 18 January 2011) since launching in November to much fanfare.

The low-cost investment vehicle is also understood to have been attracting interest from institutional investors, having delivered a 6.14 per cent increase in the two months to 31 December 2010.

Smith admitted the investment performance was over a ‘ludicrously short period’ but the fund did outperform the FTSE 100 index, which grew by 4.4 per cent in comparison.

The fund manager said he favoured consumer goods stocks, reflected in the 62 per cent weighting to the sector, with well-established brands.

However, Smith said he was bearish on retailers he claimed had lower margins and a much higher level of leverage, which meant they were more exposed to downturns in the market.