Fundsmith, the UK-based fund management firm founded by Terry Smith, is planning to launch an emerging markets investment trust this year.
The FundSmith Emerging Equities Trust (FEET) will focus on consumer stocks and the exploitation of the growth of consumer classes in emerging markets.
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The new Trust will follow a similar strategy as Fundsmith Equity fund, which includes choosing resilient, proven companies but apply it to firms based in developing economies.
The launch 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.
The FEET launch comes after identifying an investable universe of 150 emerging market companies, which include quoted subsidiaries and franchisees of companies already owned by Fundsmith Equity.
Smith said: "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.
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By GlobalData"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.
"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."
"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.
