Terry Smith scoops £1m in trust shares as discount widens

8.3% discount is still narrower than rival trusts from Genesis and Aberdeen


Terry Smith has now bought over £3m in the Fundsmith Emerging Equities Trust (Feet) since the closed-ended fund announced Michael O’Brien and Sandip Patodia were taking over portfolio management responsibilities.

Smith bought £973,250 worth of shares on Wednesday, according to a regulatory filing published on Thursday morning.

It is the third time since 22 May the former fund manager on the trust has bought up shares. That day, he bought £1m worth of shares bringing his stake up to 2.49%. Several weeks later he bought a further £1.2m.

The latest transaction takes his total stake in the investment trust to 3.18%.

The £339.9m trust is currently trading at a 8.3% discount, widening from the 2.10% discount when Smith snapped up the first block of shares in May.

‘Discount doesn’t stand out like a sore thumb’

Tilney managing director Jason Hollands said Smith buying shares sends a signal of confidence in the team. “Even at an 8.3% discount to NAV, the discount is narrower than those on Aberdeen Emerging Markets and Genesis Emerging Markets, so this doesn’t stand out like a sore thumb.”

The Aberdeen trust trades at a 13.3% discount while Genesis currently has an 11.2% discount.

Hollands added that Feet has a different profile to emerging market indices and peers due to its focus on quality growth stocks with predictable earnings, low capital intensity and which are linked to the rise of the consumer in these regions. “Some 66% of the portfolio is in consumer staples. At the geographic level the fund has 38% invested in India and just 6% in China, so it is going to be lowly correlated with emerging market indices and peers.”

Smith will continue to provide advice and support to O’Brien and Patodia as the trust’s CIO.

He takes on a similar role on Fundsmith’s newest trust, Smithson, which shattered the record for the highest UK-domiciled closed-ended fund launch last October.

That trust, which is managed by Simon Barnard and Will Morgan, currently trades at a 3.7% premium with assets totaling £1.3bn.

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