Terry Smith is arguably one of the country’s most famous fund managers thanks to the success of his Fundsmith Equity Fund, which has returned 487% since inception in November 2010 versus 270% from the MSCI World index, a key benchmark for global equities. However, not everything he touches turns to gold.
The Fundsmith Emerging Equities Trust has long been the black sheep of the Fundsmith family, failing to deliver the type of returns enjoyed by the asset manager’s flagship product. Now it is time to bring the trust to a close, with a proposal to liquidate it.
Russ Mould, investment director at AJ Bell, said: “Affectionately known as ‘FEET’, the trust invested in quite a few emerging market subsidiaries of well-known Western companies, including Unilever and Nestle. It followed the same investment process of its sister fund. Unfortunately, performance has been sluggish.
“It’s probably better to consign this experience to history and not have the trust tarnish the reputation of Fundsmith as an asset manager, rather than let it limp along in the hope things will eventually come good.”