Shares in the Smithson Investment Trust slipped close to 2% on the fund’s first day of trading, despite swiftly rising to a premium as markets opened.
The Smithson Investment Trust admitted 82,250,958 ordinary shares with equal voting rights to the premium segment of the London Stock Exchange on Friday morning.
While shares opened at 1025p, 2.5% above the 1000p issue price, and spiked to 1045p within the first 10 minutes of trading, after an hour they had tumbled back down to 1008p per share. They regained some ground as the morning rolled on and were at 1019p at the time of writing.
FTSE 250 promotion on the cards
Charles Cade head of investment companies research at Numis believes a FTSE 250 promotion for Smithson Investment Trust is already in the cards. He thinks the investment company could be moved into the index as early as December, meaning it could see significantly more money coming in from index trackers in the coming months.
Despite the share price wobble, Cade said the trust had a solid start on its debut morning of trading given there was no scaling back of the issue.
He expects the fund will continue trading at a small premium in the near-term.
Price swings expected
Adrian Lowcock head of personal investing at Willis Owen wasn’t concerned about the dip in price either.
He said a 2% fall is not unexpected considering trusts frequently trade at a discount and “markets are not as exuberant as they were even a month ago”.
“If you are investing in this fund then you shouldn’t be concerned about small swings in price and even short term volatility as it will follow the long-term investment philosophy for which Fundsmith is known for,” he said.
Fundsmith employees own £31m stake
A RNS announcement confirmed that Smith along with the founding partners and key employees of his boutique investment firm currently hold a 3.65% stake in the business worth approximately £31m.
It said directors and family members currently hold 0.04% of the trust.
The Smithson vehicle shattered the record for the largest initial public offering of a UK investment trust despite the fact star manager Smith is not a named manager on the fund.
It raised £822.5m on Wednesday more than triple its initial target and exceeded the previous fundraise record set by Neil Woodford’s Patient Capital launch in April 2015.
In another departure from previous trust launches, the Smithson Investment Trust said the bulk of the record amount it raised will be deployed within a “matter of days”.
The fund will be managed by Simon Barnard and Will Morgan, who joined Fundsmith from Goldman Sachs Asset Management last year, who will serve as investment manager and assistant manager respectively. Smith will act as an adviser on the fund.
