Fundsmith Emerging Equities Trust

Surreyboy

I was thinking of investing in the Fundsmith Emerging Equities Trust (FEET) and wondered what people's views of this trust is?

I currently invest in the Aberdeen Emerging Market Equity unit trust and was thinking of moving money into FEET. The Aberdeen fund's performance has been lack lustre over the last 2 years, although I am not too concerned by this & reckon that the performance will probably start improving as it has in the past.

The main point is that I want more exposure to Africa / frontier markets and it is less risky getting this via a trust like this, as opposed to a 'pure frontier markets fund' (such as the Black Rock Frontiers Trust for example). Also, if I top up the Aberdeen holding I have to pay an initial fee of 2%.

However, I am torn by the fact that the fees seems quite high (OCF of 1.7% & amc of 1.25%).

(I have a balanced portfolio and my emerging market holdings are just one part of this).

Are many other people invested in FEET? If so, are you concerned by the high fees.

Thanks

Dird

Is there anywhere showing performance beyond the last 5 years for funds?

If you're intent on seeing your investment erode 20% over the next 3-5 years then may I suggest just handing me the 20% and sticking the rest in Europe/US

Linton

FEET has only been running for a year or so. Its price performance is close to the Unit Trust EM sector average and slightly worse than the Aberdeen fund. On the other hand its NAV performance is slightly better. Why do you want to change? FEET hasnt been running long enough to establish a pattern.

Investing in a Smith fund means investing in Smith - he has his own strategy for investing. Star managers havent always been brilliantly successful when they move to a new sector. Andrew Bolton is the obvious example.

All EM funds have performed relatively badly for the past 3 years.

tg99

Dird wrote: »

Is there anywhere showing performance beyond the last 5 years for funds?

If you're intent on seeing your investment erode 20% over the next 3-5 years then may I suggest just handing me the 20% and sticking the rest in Europe/US

Nothing the OP has said implies any such intent.

Some manager fact sheets and own websites will have since inception and longer term perf figs.

tg99

Surreyboy wrote: »

I was thinking of investing in the Fundsmith Emerging Equities Trust (FEET) and wondered what people's views of this trust is?

I currently invest in the Aberdeen Emerging Market Equity unit trust and was thinking of moving money into FEET. The Aberdeen fund's performance has been lack lustre over the last 2 years, although I am not too concerned by this & reckon that the performance will probably start improving as it has in the past.

The main point is that I want more exposure to Africa / frontier markets and it is less risky getting this via a trust like this, as opposed to a 'pure frontier markets fund' (such as the Black Rock Frontiers Trust for example). Also, if I top up the Aberdeen holding I have to pay an initial fee of 2%.

However, I am torn by the fact that the fees seems quite high (OCF of 1.7% & amc of 1.25%).

(I have a balanced portfolio and my emerging market holdings are just one part of this).

Are many other people invested in FEET? If so, are you concerned by the high fees.

Thanks

Or you could consider investing in a specialist Frontiers fund but with a lower weighting to lower your risk accordingly. Unless you are aware of any evidence that suggests Smith has greater skill in selecting companies in this area of the market than his peers? (I'm also looking at potentially adding exposure to Frontiers at some point but looking to go down the pure Frontiers fund route albeit there are relatively few to choose from!)

Dird

tg99 wrote: »

Nothing the OP has said implies any such intent.

The desire to replace 1 EM fund with another with seemingly no turnaround in sight for a couple years

At least Aberdeen has been positive for the last 3 months~ 1 week all the way up to 1 year Fundsmith is always in decline

tg99

Dird wrote: »

The desire to replace 1 EM fund with another with seemingly no turnaround in sight for a couple years

At least Aberdeen has been positive for the last 3 months~ 1 week all the way up to 1 year Fundsmith is always in decline

So where does your research differ from the market consensus to determine that there is no turnaround in sight in the next couple of years, what special insights into EM / Frontiers do you have that all the big institutional investors do not?

Do you really think 3 months performance is statistically significant in being predictive of future performance?!

ChesterDog

In answer to the OP asking if anyone was invested in FEET, yes, I am and have been since it launched. That and India Capital Growth are my main EM exposure.

I don't expect much from them for a while yet, but my invesment strategy is to choose carefully and then leave things alone for a long time.

Although something of an admirer of Terry Smith, I have a very diversified portfolio and FEET and his equity fund combined only account for about 8% of it, with FEET being much the smaller part.

That's how I like to run it: the whole thing is just left to cook, because each part is so small that it doesn't matter what hapens to it short term.

Dird

tg99 wrote: »

So where does your research differ from the market consensus to determine that there is no turnaround in sight in the next couple of years, what special insights into EM / Frontiers do you have that all the big institutional investors do not?
Do you really think 3 months performance is statistically significant in being predictive of future performance?!

At least +3.5% shows more competence/cause for optimism than -1% but then they both lost like 10% of their value in the last year.
By institutional investors do you mean the people running the funds and want your money? Growth in China has already been reduced down to 6% for 2016, lower than 2015 and some people think they won't meet the 6%.

First 5 results in Google: Negative 4-1 Positivie

Negative: http://uk.businessinsider.com/emerging-markets-impact-on-fed-policy-2015-12?r=US&IR=T
Negative: http://www.wsj.com/articles/after-a-tumultuous-2015-investors-have-low-expectations-for-markets-1451693014
Negative: http://www.bloomberg.com/news/articles/2015-11-04/ubs-emerging-markets-are-entering-a-new-and-dangerous-phase-in-2016
Negative: http://www.cnbc.com/2015/12/01/jpmorgans-10-investment-themes-for-emerging-markets-in-2016.html
Positive: http://uk.reuters.com/article/uk-global-markets-outlook-emerging-marke-idUKKCN0T915D20151120

tg99

Dird wrote: »

At least +3.5% shows more competence/cause for optimism than -1% but then they both lost like 10% of their value in the last year.
By institutional investors do you mean the people running the funds and want your money? Growth in China has already been reduced down to 6% for 2016, lower than 2015 and some people think they won't meet the 6%.

First 5 results in Google: Negative 4-1 Positivie

Negative: http://uk.businessinsider.com/emerging-markets-impact-on-fed-policy-2015-12?r=US&IR=T
Negative: http://www.wsj.com/articles/after-a-tumultuous-2015-investors-have-low-expectations-for-markets-1451693014
Negative: http://www.bloomberg.com/news/articles/2015-11-04/ubs-emerging-markets-are-entering-a-new-and-dangerous-phase-in-2016
Negative: http://www.cnbc.com/2015/12/01/jpmorgans-10-investment-themes-for-emerging-markets-in-2016.html
Positive: http://uk.reuters.com/article/uk-global-markets-outlook-emerging-marke-idUKKCN0T915D20151120

Performance over such a short period cannot be interpreted as having any fundamental basis to be optimistic or not, it is largely noise and statistically insignificant.

By institutional investors I mean the majority of investors who make up the market ex retail investors, e.g. pension funds, insurance companies, asset management companies etc.

None of the points on EM you have mentioned above necessarily give any reason to expect EM equities to lose money over the next two years. I think the point you are missing is that the market is a DISCOUNTING MECHANISM i.e. the price of a market/stock is based on investors' future expectations. The consensus is negative on EM at present so the only way to really expect EM to lose money / underperform is if your own research has resulted in you working out what the average investor / consensus expects but that your forecasts come out more negative. My impression from the above is that you are more just basing your view on general pessimism around EM which is already factored into market prices. Indeed, 4 negative v 1 positive is more likely to be a contrary indicator than an indicator to go short / underweight / not own EM.

Dird

Shares in Greek companies are probably low right now too, perfect time to buy and enjoy another year of 0-10% losses.

I'd rather wait for a year when shares in Chinese/Brazil/oil companies are showing 0-2% growth then hope for a snowball effect