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Fundsmith Emerging Equities to enter voluntary liquidation

Fundsmith Emerging Equities to enter voluntary liquidation – Fundsmith Emerging Equities (FEET) has announced plans to enter voluntary liquidation, with the cash proceeds arising on realisation of the portfolio returned to shareholders. The board has sought the views of its largest shareholders and its professional advisors and believes that the proposals are in the best interests of shareholders as a whole.

The company will publish a circular shortly setting out details of the proposals to place the company into members’ voluntary liquidation, appoint a liquidator, and delist the company. FEET will convene a general meeting at which approval will be sought from shareholders. It is anticipated that, if approval is forthcoming, the trust is expected to be placed into voluntary liquidation by the end of November. The board recommends that shareholders vote in favour of the proposals. 

Terry Smith, CEO and CIO of Fundsmith LLP, 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.

‘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.’

Martin Bralsford, chairman, added: ‘We would like to thank Terry and his team for the diligent effort they have made over the last eight years as manager. We believe it to be in the best interests of shareholders as a whole to liquidate the portfolio and return their cash to them.’

[QD comment: Following the wind up of Jupiter Emerging & Frontier Income earlier this year, closely followed by ScotGems, this situation is disappointing, but sadly not surprising. Aside from Gulf Investment Fund which has a regionally-focused mandate, there is still no trust in the global emerging markets sector that is trading at asset value or a premium which would make a good rollover vehicle. If this were an option, Mobius (which we have previously said could do with being a bit bigger) would be the best route but is trading on a discount of 5% (the others are all on double-digit discounts). Given the circumstances, it makes sense for investors to take cash and reinvest it in the market.]

FEET : Fundsmith Emerging Equities to enter voluntary liquidation

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