Fundsmith founder Terry Smith added a mystery holding to his £27bn flagship equity fund in July, while Fundsmith Emerging Equities Trust (Feet) manager Michael O’Brien has picked up two new positions.
Smith (pictured) is famed for his “buy good companies, don’t overpay and do nothing” approach, a creed which the managers in his Fundsmith stable also live by.
But recently the boutique boss has been making an uncharacteristic number of chops and changes to his Fundsmith Equity fund and other managers have been following suit.
Smith revealed he had begun buying a new position for the fund in the July factsheet but said he would not identify the company until “we have accumulated our desired weighting”.
The mystery holding is the third new investment he has made in the last 16 months.
Most recently he added Church & Dwight, owner of consumer brands such as Trojan and Oxiclean, in February. Taking advantage of falling share prices off the back of the coronavirus he scooped up positions in Nike and Starbucks in March 2020 and in December picked up French luxury goods giant LVMH.
Smith has also sold out of a number of longstanding holdings, booting Intertek and Sage from the fund this year and ditching Clorox and Reckitt Benckiser in 2020.
Feet initiates holding in Chinese medical platform
Feet manager Michael O’Brien was also in a buying mood in July, initiating two holdings during the period.
The first was Genpact, described in the trust’s latest factsheet as a “predominantly Indian business process management firm”. Last month shares in the New York-listed company slumped to a low of $47 but since then have risen to $49. Year-to-date shares are up over 21%.
O’Brien’s second purchase was Medlive Technology, a Chinese online platform for professional physicians. Shares in the company nosedived toward the end of July after a government crackdown on the private tutoring sector sparked a sharp tech sell-off.
Feet, which has around 11.2% in Hong Kong stocks and 5.9% invested in Chinese companies, saw net asset value fall by 1.5% last month and its share price dip 2.5%. This was significantly better than the MSCI Emerging Markets Index which plunged 7.3%.
Its biggest detractors in July were Tencent, Vitasoy, Foshan Haitian, NetEase and Hindustan Unilever, while the top five contributors were Havells, Godrej, Eris Lifesciences, Dr Lal Pathlabs and Info Edge.
Feet’s board has openly vented about the trust’s persistent discount after its share price failed to keep pace with its NAV outperformance during the initial months of the Covid crisis.
Last November the trust initiated its first ever share buyback, three months after chairman Martin Bralsford said they were not always in the best interest of shareholders.
Despite this the trust is still trading at a 7.3% discount, according to the Association of Investment Companies.
See also: Fundsmith Emerging Equities Trust surprises with first share buyback
