Here is a notice posted on the London Stock Exchange. It should be read by all fund managers regardless of whether their fund is currently assessed as adding value – or not.
I’d draw their attention to Terry Smith’s comment
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
Here is the statement posted on the website of the London Stock Exchange
Fundsmith Emerging Equities Trust plc
14 September 2022
Proposal to Liquidate
“The Board of Fundsmith Emerging Equities Trust plc (‘the Company’) announces that, following notification from Fundsmith LLP (the investment manager and AIFM of the Company) that it intends to give notice under the investment management agreement, proposals will be put forward for the Company to be placed into 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. The Company will convene a General Meeting at which approval will be sought from shareholders. It is anticipated that, if approval is forthcoming, the Company is expected to be placed into voluntary liquidation by the end of November.
The Board will recommend that shareholders vote in favour of the proposals. The Board will vote their shares (112,250 – 0.43%) in favour of the resolutions. The Board has also received indications from Fundsmith LLP that partners and staff of the firm will vote their shares (1,379,227 – 5.25%1) in favour of the resolutions.
Terry Smith, CEO and CIO of Fundsmith LLP, commented:
“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.”
The Chairman of this investment trust is in agreement
Martin Bralsford, Chairman of the Board, commented:
“We would like to thank Terry and his team for the diligent effort they have made over the last eight years as Investment Manager. W believe it to be in the best interests of shareholders as a whole to liquidate the portfolio and return their cash to them.”
Where Terry Smith leads, others should follow.
Fundsmith Equity Fund $FEET launched on 25 June 2014 (over 7 years ago) – £1,000 invested in FEET at launch would be worth £1,418 at the current NAV but it would be worth £3,450 in the Fundsmith Equity Fund. A lower-risk strategy of developed market blue-chips has worked best. pic.twitter.com/vWrhqxylAh
— Andrew 🇺🇦 (@fundhunter_co) September 16, 2022