Terry Smith's boutique Fundsmith is to launch an emerging markets trust.
The FundSmith Emerging Equities Trust (FEET) will employ the same strategy as Smith's Fundsmith Equity mandate, focusing on consumer stocks and the growth of the middle class in emerging markets, which the firm believes looks likely to last several decades.
Smith (pictured), who will run the trust, has identified an investable universe of over 150 companies for FEET.
Smith said he chose to launch under a closed-ended structure for liquidity reasons. 'Although some of these companies are not small, there is not enough liquidity in their shares in local markets to hold them responsibly through an open-ended fund. Especially one with daily dealing,' he said.
'As an investment trust, FEET will overcome the issue of combining an open-ended fund with stocks which have limited liquidity in the underlying investments since it will raise an initial fixed amount of capital, to which I will subscribe.'
The Fundsmith Equity fund launched in November 2010. In the three years to 23 January the fund has returned 55.2% versus a 30% rise in the FTSE World Index, earning Smith a Citywire AA-rating.