Terry Smith’s (pictured) Fundsmith Emerging Equities Trust (Feet) has continued to sell off holdings as it enters the final weeks before trading is suspended. The fund’s latest factsheet has confirmed it exited stakes in five companies in October, adding to the two Egyptian businesses it sold out of in September.
During October, Feet sold its holding in DP Eurasia, which runs Dominos Pizza in Russia and Turkey, citing a lack of confidence in the respective economies of each country. It also exited stakes in Philippine Seven and Medlive over concerns about competition in the market. Regarding the latter, Feet said there was also an “increasing divergence” between Medlive’s actual performance and what the fund’s managers “thought it was capable of at the time of investment”.
The fund also sold two Indian holdings during the period: Proctor & Gamble Hygiene and Eris. Fundsmith said the decision to exit the former was taken on “valuation grounds” while the latter was over “concerns about competition in the Indian generic pharmaceutical market”. Despite the sell-offs, Indian companies still make up more than 40% of the fund.
Fundsmith also stated it had begun buying a new position for the fund, but declined to reveal the identity of the company until the fund had accumulated the “desired weighting”.
This rebalancing comes after the fund’s board laid out a timeline for its liquidation last month. The appointment of the joint liquidators, both from EY, is expected to be confirmed after the general meeting on 11 November.
On the morning of 14 November all shares will be removed from the FCA’s Official List and admission to trading will be cancelled. An initial distribution date has been pencilled in for 18 December.
Since the start of October, Feet’s market capitalisation has dropped from £350m to £319m according to its factsheet, while its net asset value has dropped from 1390p to 1315p. It now trades at a discount of 7.6%, down from -3.6% at the end of September.
Feet performance overview, % return
| October 2022 | 2022 to 31.10.22 | 2021 | 2020 | 2019 | 2018 | 2017 | Inception to 31.10.22 | Annualised to 31.10.22 | |
|---|---|---|---|---|---|---|---|---|---|
| Feet NAV | -5.4 | -13.1 | +3.8 | +20.7 | -0.5 | -3.0 | +21.2 | +32.9 | +3.5 |
| Feet share price | -9.3 | -11.0 | -3.4 | +29.1 | -7.4 | -9.4 | +24.5 | +22.3 | +2.4 |
| Equities | -6.1 | -17.0 | -1.4 | +14.4 | +13.9 | -9.3 | +25.3 | +45.1 | +4.6 |
| UK bonds | +4.5 | -15.2 | -4.5 | +4.6 | +3.8 | +1.2 | +1.4 | +4.3 | +0.5 |
| Cash | +0.2 | +0.9 | +0.1 | +0.3 | +0.8 | +0.7 | +0.4 | +4.6 | +0.5 |
Feet’s stake in Foshan Haitian proved to be one of the fund’s worst-performing holdings in October, having been one of its most lucrative stakes the previous month. Game provider NetEase was a repeat offender, appearing in the top five detractors again in October, while Asian Paints, Tencent, and Hindustan Unilever completed the list.
On a more positive note, Feet’s top five contributors were its holdings in Hypera, Vitasoy, Mercadolibre, and Genpact, with Wal-Mart de Mexico retaining its place in the list from last month.
