Fundsmith Emerging Equit... Share Discussion Threads

[zho] 01/5/2017 08:49

hectorscrackhouse,

Thanks for the link. Many interesting points there.

Here's a comment I posted elsewhere:

One point touches on FEET (Fundsmith’s emerging markets trust whose separate AGM is this month) and index-tracking ETFs, which have attracted more than 100% of new funds going into emerging markets over the last 3 years i.e. investors have withdrawn money from managed funds to invest in ETFs. This lead to a doubling in price of Samsung (the largest company in the Morgan Stanley Emerging Markets Index) during 2016 despite if having a dreadful year (exploding S7 batteries, product recall and production stoppage, US networks refusing to offer the S7, the Federal Aviation Authority forbidding S7s on flights, even when switched off, Samsung head offices raided and corruption charges against senior board members). Active fund managers bemoan the rise of ETFs but Terry Smith sees it as an opportunity, as long as investors are patient, and he points out that the average ROCE (Fundsmith’s key metric) on the MSEMI is 12% against 41% for FEET. If you’re interested, that discussion starts at 1.24.

[brahmsnliszt] 30/4/2017 20:09

Been invested in fundsmith equity for a few years now adding along the way. Not touched FEET yet. I hope he doesn't do a Woodford and open several different funds each with a different focus. Strikes me Woodford has taken his eye off the ball with numerous different funds now.Terry Smith really is what the UK fund industry was crying out for. The more I read up on him and watch him being interviewed the more I learn.....and it's all adding greatly to the end game for me in recent years.

[hydrus] 29/4/2017 13:57

Thanks Hector I've shared the link in relation to the pet sector on PVG forum as it's a high growth pet company

[hectorscrackhouse] 22/4/2017 11:17

The main Fundsmith Fund ASM 2017 was posted yesterday



He does touch upon some things of interest to FEET
- Mauritius 0:23.30
-Some specific FEET material from about 1:20:00
-Some material on Moat issues in respect to portfolio constituents and disruptive change 0:53:55
-Pet Food and Pet Perversion in general 1:35.00

It's all worth a look, although regular viewers will know it is repetitive, year to year.

[mnomis] 10/4/2017 12:49

I have recently bought some FEET for my SIPP. Refreshing approach, which in the long-run should do well. Who cares about the short term. I would like to put some cash in the Equity Fund too, but waiting for a better entry.

[mad foetus] 03/3/2017 10:37

The main fundsmith vehicle is my biggest investment and yesterday the Unit price hit 320p, exactly double my average purchase price. Given that it was supposed to be the safest part of my portfolio and has ended up being the best performing, to say I am delighted is an understatement.not sure what to make of FEET, but given his track record And the confidence he had that FEET will outperform fundsmith I feel I owe the concept a few more years yet.

[trytotakeiteasy] 03/3/2017 10:30

and of course all the sports people moving to Monaco/Switzerland isn't about avoiding tax. They just like it there. I think Terry Smith has a good track record. He seems to be a "self-styled rebel" with the Accounting for Growth book. However, the broking business he was involved in after that had a lot of mixed quality companies as clients. Emblaze for example whose CEO went to jail. If he cared about the brokers' fund management clients why have companies like Emblaze?

In Fundsmith he has railed a lot against other fund companies but hasn't cut Fundsmith's fees despite the increase in assets. His opinions seem to "coincide" with his own interests in the same way that Donald Trumps opinions also coincide with his interests.

Having said all that the performance of the main Fundsmith fund is excellent and he has really shaken up the industry. We are lucky to have a fund like Fundsmith to invest in against the backdrop of a generally dire fund management industry. In my view, Mr Smith has made a lot of good moves such as by having no performance fees and adopting a high quality company and low turnover strategy. Not everyone liked Steve Jobs but he transformed the smartphone market.

[jonwig] 03/3/2017 09:18

montyhedge nails it:



Terry Smith, now 63, is apparently tired of London. A Companies House filing this week revealed that the pugnacious pro-Brexit East Ender — who ran stockbroker Collins Stewart, founded asset manager Fundsmith (and is an occasional FT columnist) — has been resident in Mauritius since January. One friend tells City Insider: “He’s not getting any younger. He wanted to take life a bit easier.” Fundsmith, originally and unaccountably registered with Companies House as “Funsmith” back in 2010, now has nearly £10bn of assets under management. It has had an office on sun-kissed Mauritius for the past three years. Smith said the location is a logical one for investing in Indian and other Asian assets for the group’s small emerging equities fund. More than that, he finds it “helpful” being “away from the noise of London”. The tax regime should be pretty helpful, too. The Indian Ocean island has a 15 per cent tax rate for companies and individuals alike. Last year, the bulk of the administrative expenses of the UK-based Fundsmith group (£29.4m out of £38.8m) were paid to the Mauritian entity, which employs five of the group’s 20 staff. That cut UK profit (distributable to partners, led by Smith, and then taxable) to £2.8m, down 78 per cent. What fun, Smith.

[montyhedge] 02/3/2017 15:29

He's 63 first step to retirement perhaps.

[mad foetus] 02/3/2017 15:19

It is in a good time zone for London and has lots of double tax treaties, though I'm not sure that is relevant for Fundsmith. Also, there are lots of accountants and fund administrators there and it is generally regarded as a gateway for investment to both India and Southern Africa. It may be that FEET invests through a number of subs and it is simpler for working out things live whether division can be paid gross to have shares owned through Mauritian subs. That would be my guess.

[jonwig] 02/3/2017 14:28

Is physical travel relevant these days?

[trytotakeiteasy] 02/3/2017 12:17

Interesting thing in The Times yesterday about the shift to Mauritius. Smith says it is easier to trade Asian markets from there. Probably makes some sense for FEET. However, for the main Fundsmith fund I thought the idea was to have a low turnover so the ability to trade shouldn't be important.

An 12 hour flight to Mauritius from London. Not really sure I am convinced about the rationale for a move to the Island. Any thoughts?

[danieldruff2] 19/2/2017 14:11

My concern is that if the market decides EM consumer staples deserve a lower PE of say, going from 35 to 25, over a ten year period, this one would go nowhere.

[papy02] 19/2/2017 13:20

Good Terry Smith article in FT Money. Puts more flesh on his argument that the EM rally so far has benefited large cap and cyclical stocks, rather than the good businesses FEET invests in.

I invested more in FEET on Friday. I agree (hope) that performance to date is Graham's "voting" stage, and am prepared to wait for "weighing" to take effect in the longer term. Though I'd welcome more detail from TS on how the FEET portfolio is doing on fundamentals. Bit of an act of faith atm.

[papy02] 16/2/2017 16:57

Not the first time at a discount. I bought in Jan,June, and Nov 2016 at a discount (plus unfortunately other times at a premium)

[mad foetus] 16/2/2017 14:07

Moving to a discount for the first time

[trytotakeiteasy] 31/1/2017 22:41

Mozy123 - Not sure what I think about Fundsmith's move to Mauritius..possibly necessary to avoid tax on holding Indian shares. However, could be as a tax avoidance strategy for the owners of Fundsmith. Perfectly legal no doubt but not great for the UK government. Any thoughts? The praise for the Mauritius time zone for buying and selling seems odd given that Fundsmith is a long-term investor.

[mozy123] 18/1/2017 16:07

Moved $30mil to run the marketing function of fundsmith offshore - tax planning it seems

[trytotakeiteasy] 18/1/2017 15:56

can't be bothered to register... what does it say?

[papy02] 05/12/2016 18:58

Surely the issue is: how does a Trump-led swing to protectionism impact the investment thesis here. Terry Smith has been silent, while the NAV and share price reflect the market's view (and also reflect fx-rate swings)

[flying pig] 05/12/2016 17:38

More shares improves the profitability of the fund management company; to date the investment process is not generated significant outperformance! While it is not a hugely expensive management fee, it is not at the cheapest end of the market.
I will wait and see how the shares get on in the medium term.

[trytotakeiteasy] 04/12/2016 20:58

Have seen they are advertising this in the newspapers a bit. My own thoughts are that it is not really a proven concept in the same way that the main Fundsmith fund is. FEET buys into companies that are often focused just one or a few countries. So there is much more country risk. I also don't know if the Fundsmith team can really cover all the emerging markets around the world for the sectors they are looking to buy into.

There was one Egyptian diagnostics company they were buying to that is listed in the UK whose share price only seems to go down. To date it has to be said that FEET hasn't really been a great investment. That is despite the fall in the value of sterling since launch.