Fundsmith founder and City financier Terry Smith is planning to launch an investment trust focusing on emerging markets.
The Fundsmith Emerging Equities trust will launch this year. Smith said it reflects the fact 32% of the revenues from the open-ended Fundsmith Equity fund come from emerging markets, although the businesses are based in Europe and North America.
In a letter to shareholders, Smith (pictured) said: "We are often asked why we do not invest directly in emerging markets if we like exposure to their superior growth.
"The reasons are complex, but one of the main ones is liquidity. Although some of these [emerging market] 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.
"In order to overcome this problem we have decided to launch a new fund in 2014. This will be an investment trust investing in the same strategy as our existing fund but mostly in companies which are listed in emerging markets."
The trust will focus on consumer stocks, similar to the existing strategy, with Smith selecting stocks from a universe of 150 companies.
"There is an established trend for the emergence of consumer classes in emerging markets which looks likely to last several decades and which should provide a tailwind for its performance," he added.
The Fundsmith Equity fund launched in November 2010 and now had £1.6bn under management. It has been a solid performer, delivering 54.8% over the three years to 23 January against a Global sector average of 22.6%, according to FE.
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