The board of the £323 million Fundsmith Equity Fund has suggested a voluntary liquidation of the business, after learning that Fundsmith plans to leave as investment manager.
The board will advise shareholders to support the proposals at a general meeting that will be called.
The board will vote its respective shares, totaling 112,250 (0.43%) and 1,379,227 (5.25%), in favor of the resolutions.
By the end of November, Fundsmith Emerging Equity Trust (FEET) will probably enter into voluntary liquidation, with cash proceeds from the sale of assets going back to shareholders.
While the trust has generated positive returns since its inception, it has “fallen below their expectations,” according to Fundsmith CEO and CIO Terry Smith, who announced the change.
In terms of returns since the beginning, the fund has returned 22.3% significantly less than the performance of the MSCI Emerging Markets benchmark, which has returned 67.6% and the sector average for Global Emerging Markets, which is 42.6%.
The trust has also performed worse than its sector and benchmark over the past one, three, and five years.
Smith said that they considered it would be in the best interests of shareholders to obtain their investment back in cash through a liquidation of the portfolio and wound-up of the firm, in contrast to other fund managers who might have wished to hold onto the fund for the sake of fee income.
The chair of the board, Martin Bralsford added that they would like to congratulate Terry and his colleagues for the meticulous effort they had made over the previous eight years as investment manager.
Bralsford strongly believed that it was in the best interest of shareholders as a whole to liquidate the portfolio and return the cash to them.
