Terry Smith’s emerging markets investment trust to close
14th November 2022 12:40
by Sam Benstead from interactive investor
Shareholders overwhelmingly voted to close the trust after Terry Smith pulled the plug due to poor performance.
Terry Smith’s emerging markets trust will be wound up and cash will be returned to shareholders, as shares today stopped traded on the London Stock Exchange.
In a shareholder vote on Friday, 99.3% of votes were in favour of the wind-up, with more than 12 million votes cast.
Terry Smith pulled the plug on Fundsmith Emerging Equities Trust (FEET) in September, saying that performance had “fallen below our expectations”.
The trust, which launched in June 2014, attempted to replicate Smith’s successful stock picking formula in developed markets to the emerging market region. However, performance has not lived up to its billing, which has led Smith to act.
Since launch, according to FE Fundinfo, investors holding onto the trust and reinvesting any dividends would have made 24.8% compared with 57.2% for the MSCI Emerging Markets index or 40.7% for the typical emerging markets investment trust.
Announcing the intention to close the trust, Smith said: “We have always maintained that we would only run funds where we felt we had a particular edge that would allow us to deliver superior risk-adjusted returns.
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“Whilst FEET has made a positive return since launch in 2014 it has fallen below our expectations and, unlike other fund managers who might seek to hold onto the fund for the sake of the fee income, we feel it would be in the best interests of shareholders to receive their investment back in cash through a liquidation of the portfolio and wind-up of the company."
In May 2019, Smith stepped down from the day-to-day running of the trust. It was handed over to Michael O’Brien and Sandip Patodia as portfolio manager and assistant portfolio manager, respectively. Smith is chief investment officer.
At the time, Smith apologised to investors who felt disappointed by his move away from being the trust’s lead manager.
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