Terry Smith is to close his £319.4mn emerging markets investment trust, in a blow to the star stockpicker after a spell of weak performance.
Fundsmith Emerging Equities Trust, launched in 2014 to apply Smith’s signature investment approach to frontier and emerging markets, will place itself in voluntary liquidation, sell off its portfolio and return the cash to shareholders, the investment trust said on Wednesday.
The trust’s share price returns have trailed behind the MSCI Emerging and Frontier Markets index in all but one of the past five years.
“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,” said Smith, who added the performance had “fallen below our expectations”.
“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,” he said.
The trust said it plans to close by November, subject to shareholder approval.
The closure of the emerging markets trust will not affect Smith’s £23.5bn flagship Fundsmith Equity Fund or his other strategies.