Terry Smith steps back from FEET - AJ Bell comment

Ryan Hughes
22 May 2019

Ryan Hughes, head of active portfolios at AJ Bell comments on Terry Smith stepping back from day-to-day running of the Fundsmith Emerging Equities Trust:

“While news that Terry Smith is stepping back as the named manager of Emerging Equities Trust will no doubt make investors ears prick up, in reality this is likely to mean no change to how the portfolio is run with the exact same philosophy and process being followed by O’Brien and Patodia. Both have been involved in the management of the trust since inception and therefore are fully versed with the current holdings. More welcome is news that the annual fee is being cut by 0.25%, however, even with this cut, the trust still looks expensive with ongoing costs of 1.27%, particularly with such lacklustre performance over the past five years.

“Investors should be aware that the current positioning of the trust is vastly different to the benchmark with a huge underweight to China and overweight to India at a country level while the trust has nearly 70% in consumer staples companies. This may well explain the significant underperformance vs the index over the past five years and investors should understand that this trust is highly likely to continue to behave very differently to the benchmark.”

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