Fundsmith Emerging Equit... Share Discussion Threads

[mad foetus] 02/7/2014 08:02

Agree Midas, I'm looking to hold this more or less forever. Good diversification and my overall aim is to make 10% a year across my whole portfolio so 5-10% in here looks like a solid long term choice.

[m1das_touch] 01/7/2014 20:49

They'll have to invest the £193m slowly and carefully or else the market could move against them before they've built their positions. Terry Smith doesn't believe in timing the market, but nor does he like to overpay, so I'm happy for them to take their time building positions.

Agree that the premium is silly, but probably just down to people not investing via the IPO and now fearing they might miss the boat on what could be a very canny and profitable investment on a 5-10 year view.

My feeling is that the premium will gradually reduce over the coming months, albeit it might generally trade with a slight premium because of the Terry Smith factor.

For me this is a buy and pretty much forget trust - am quietly confident that it will have a very positive impact on my SIPP in the coming years.

[mad foetus] 01/7/2014 14:24

hxxp://www.feetplc.co.uk/fund-factsheet
They invested 2% of the funds raised in the last 4 trading days of June. It could take some time to get fully invested at this rate. The premium looks silly to me but I'm happy with it.

[mad foetus] 26/6/2014 15:43

Duncan Cameron was also involved in money supermarket, he's also in for £10m

[mad foetus] 26/6/2014 15:33

Simon Nixon lives in Jersey, as does Martin Brailsford, the chairman of the board, and Terry is a regular visitor. I assume he knows what he is getting into and also, with that amount of skin in the game, will be regularly meeting the board and giving them his insights.

[m1das_touch] 26/6/2014 14:47

Those are some pretty big individual holdings just announced. 1 million and 2 million shares each - I'm assuming that's Simon Nixon of Moneysupermarket.com, so he's clearly got plenty of money to go around...but even so investing £20m is some vote of confidence in Terry Smith and his team!

[masurenguy] 26/6/2014 11:50

Interesting fund and launch timing too. I rate Terry Smith as a Fund Manager but question his knowledge, investment insight and experience in the emerging market sector. Will watch with interest from the sidelines for the time being to see how this develops. Meanwhile early investors here might like to take a look at CLIG who have artound 25 years experience in investing in EM closed funds and are producing a dividend yield of circa 8% at todays shareprice.

[m1das_touch] 26/6/2014 10:17

He also has a personal interest in getting it right, beyond his own reputation, as he's invested £5m of his own money in FEET...that's what I call significant skin in the game. I'd love to know how many other trust / fund managers have invested that much money in their own funds.

And you might well be right about the potential gains...my spreadsheet shows that I'm up around 1,000% already on an APR basis!! ;)

[mad foetus] 26/6/2014 10:15

hxxp://www.trustnet.com/News/517820/numiss-cade-tips-terry-smiths-fundsmith-emerging-equities-trust/

[mad foetus] 26/6/2014 10:03

Fully agree M1das, lots of people hate Smith because he really does show that a lot of the mystique around fund management is bull. You don't need to wine and dine brokers to get their research and insight. You don't need to hedge or leverage or have fancy strategies to get good returns. You can find out more by reading a balance sheet than by reading a broker's report, if you have the time and discipline to do it.

I remember when Fundsmith was launched and Mark Dampier said "Smith has no experience, what he is doing is much the same as M&G Global Titans (or similar) and we would recommend that". After 3 years Fundsmith was up 60% and the M&G fund flat.

I am a born optimist but am well pleased to be in this on day one, think the depressed market and strong sterling mean that it is the best place to stash the long term rainy day fund. If it doesn't go up fivefold in the next 10 years I would be surprised.

[m1das_touch] 26/6/2014 09:57

Terry Smith will be investing in completely different kinds of companies to Anthony Bolton...we'll wait and see, but I suspect a lot of them will be listed subsidiaries of major western consumer companies, e.g. Unilever Indonesia etc. etc. That's certainly what he's hinted at anyway.

I wouldn't take the views of brokers too seriously - Smith is not much liked by the City elite, because he exposes bad practice and challenges the status quo. I bet they would have been saying 3 and a half years ago "He's got no experience of running an open-ended fund", but he's done pretty well with that!

Sure there are risks, as with every investment, and Anthony Bolton didn't do too well in China. But as risks go, I personally feel that entrusting management of a portion of my wealth to Terry Smith investing in emerging markets is a pretty well calculated one and has a very good chance of paying off handsomely over the medium to longer term.

[mad foetus] 26/6/2014 09:27

I had dinner with four brokers last night - they were expressing incredulity that anyone would invest in FEET. "He's got no emerging market experience" they said and told the story of how Anthony Bolton was given a tour of factories in China which had been staffed entirely by actors in an attempt to basically defraud the fund.

And I thought, nobody pulls the wool over Terry Smith's eyes.

[m1das_touch] 25/6/2014 21:39

I don't feel so bad now at having to pay A J Bell a £29.95 phone dealing charge to participate in the IPO. There was no obvious reason why it couldn't have been done online and I was tempted not to participate and just buy in the market with a £4.95 dealing charge. With today's opening premium the £29.95 charge now seems insignificant, as any savings made in dealing charges would have been swallowed up many times over by the premium.

Interested to see how Terry Smith does with emerging markets - I think following the typical Fundsmith principles and focussing on consumer stocks could work out really very well over the long term, particularly as he's starting at a time of generally poor sentiment towards emerging markets and depressed currencies. Could prove to be a sweet spot if both markets and their currencies re-rate over the next few years.

[topvest] 25/6/2014 21:11

It's the usual position on investment trust new issues. No selling on listing and those new investors wanting to get on board have to pay a premium. Good solid start though. It's where they are in 5 years that matters though!

[mad foetus] 25/6/2014 11:33

SP chart not working but seems to have opened at 1035p, a 3.5% premium. Which is surprising, as if you wanted to buy why would you not have taken up the offer!

[topvest] 24/6/2014 13:45

OK - good news, just one day late on announcing.

[mad foetus] 24/6/2014 12:30

They got £193m:

Shares Will Commence Trading on 25th June 2014

24th June 2014: Fundsmith LLP ('Fundsmith'), founded by Terry Smith, today announces that the Fundsmith Emerging Equities Trust PLC, an investment trust, has raised £193 million following a Placing and Offer. FEET will be listed on the premium segment of the Official List and traded on the London Stock Exchange's Main Market for listed securities. Admission will commence at 08:00 BST on 25th June 2014.

Terry Smith, Founder and Chief Executive of Fundsmith, commented:

"I am delighted that so many existing and new customers have supported the offer and that FEET will have a shareholder base that includes some of the UK's largest and most sophisticated investors. We undertook the majority of the marketing in-house, thus saving on initial placing fees, and we expect the total costs of the issue to be 0.4% of the funds raised, which I believe is a record in the investment trust sector if not the IPO market as a whole."

FEET will be invested using the same strategy as the Fundsmith Equity Fund but with one added dimension: all of the companies in FEET will have the majority of their operations in, or revenue derived from, Developing Economies. It will avoid the same sectors which the Fundsmith Equity Fund avoids - financials; heavily cyclical sectors such as construction and manufacturing; utilities; resources and transport, and will instead invest almost exclusively in consumer stocks.

Fundsmith's selection process is helped by the fact that about a fifth of the companies in the FEET Investable Universe are quoted subsidiaries, associates or franchisees of the multinational companies in the Investable Universe for the Fundsmith Equity Fund.

The companies in which Fundsmith seeks to invest have relatively predictable revenues and low capital intensity, which helps when seeking to invest in companies with high returns on capital. They also deliver most or all of their profits in cash. They have defensible and strong market positions, typically derived from a combination of brands, trademarks and distribution systems or networks.

Smith added:

"This combination of characteristics delivers compound growth in shareholder value over the long term. The companies will also provide direct exposure to the rise of the consumer classes in the developing world. This rise is a well-established trend with a predictable pattern of development and has a long way to run."

"The performance of the average Emerging Markets fund has not kept up with the developed markets over the last five years. Our analysis suggests that this is partly as a result of managers investing in poor quality companies and getting the inevitable result. They also often combine illiquid Emerging Market investments with open-ended structures, which can have disastrous consequences if faced with high levels of redemptions; fund performance can only suffer from punitive dealing costs of the inevitable cycle of inflows and outflows. For these reasons we chose to structure FEET as an investment trust."

[mad foetus] 24/6/2014 09:48

I would be very surprised. The main fund has £2bn, Terry is putting £5m of his own money into this one. But who knows - I don't think many institutions will invest as they don't much like Terry's approach. But I put in for a big slug, I would be astonished if they didn't get £100m.

[topvest] 23/6/2014 21:16

Hmm - anyone seen an announcement today. No announcement normally means they haven't made it to the minimum?

[topvest] 21/6/2014 19:34

We should get an update next week on take-up I guess given this closed on 20/6.

[mad foetus] 20/6/2014 09:40

I invested into Fundsmith about a year ago and got a four figure reference number, so I don't think this one could have 65,000 applicants already. Even at just £10,000 each, that would be a £6.5bn fund!

I put in for a big slug, happy to lock away for a decade, hope I get the lot!

[jonwig] 19/6/2014 08:05

topvest, can you put the fund website into your header, please? Thanks.



My application just now had ref no. 65077, so they should easily exceed the £100m minimum level. The maximum of £250m shouldn't be a problem.

[mad foetus] 16/6/2014 09:30

well, I've put my app in. Fundsmith has done well for me, and while I expect FEET to be more volatile I suspect the Terry Smith "brand" may cause this to leap to a premium. It will be interesting to see if it is oversubscribed as well. It should be a spectacular long term holding as the demographics give such a headwind to the type of companies the fund will buy.