Fundsmith Emerging Equities Trust has called on shareholders to vote in favour of voluntary liquidation as the investment arm feels the sting of a cooling market
The board said it has sought the views of its largest shareholders on winding down the £319.4mn emerging markets investment trust and believes that the proposals are in the “best interests of shareholders as a whole”.
By placing itself in voluntary liquidation, this will mean selling off its portfolio and returning cash to investors.
This is a blow to CEO and CIO of Fundsmith Terry Smith whose £23.5bn flagship Fundsmith Equity Fund has plunged 12 per cent so far this year.
“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,” Smith said following the statement to shareholders this morning.
“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 of the board, said: “We would like to thank Terry and his team for the diligent effort they have made over the last eight years as investment 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.”
Fundsmith Emerging Equities Trust shares jumped ten per cent this afternoon following the news.