U.K. Money Manager Smith Plans To Shutter £350 Million Fund

The UK’s most popular money manager is proposing to shut down one of his listed funds after it performed below his expectations.

<div class="paragraphs"><p>Source: Josh Appel/Unsplash</p></div>
Source: Josh Appel/Unsplash

(Bloomberg) -- The UK’s most popular money manager plans to shut down one of his listed funds after its performance trailed the stockpicker’s own expectations.

Terry Smith is planning to liquidate the £350 million ($404 million) Fundsmith Emerging Equities Trust, according to a statement Wednesday. After running it since 2014, Smith said he felt it no longer had a “particular edge that would allow us to deliver superior risk-adjusted returns.”

The fund has persistently traded below its net asset values since mid-2019 and traded at a 13.5% discount on Monday, according to data compiled by Bloomberg. Its shares were up 10.3% in London on Wednesday, the most since its launch, on news of liquidation.

The star money manager has had a challenging year so far as volatile markets hit his concentrated growth strategies. His flagship £24 billion vehicle Fundsmith Equity -- the UK’s largest equity mandate -- is down more than 10% so far this year. 

It comes in a period of poor performance for growth managers and many of Smith’s UK peers are facing similar headwinds. Nick Train’s £6 billion Global Equity fund and the Blue Whale Growth fund, managed by Peter Hargreaves protege Stephen Yiu, have both lost about a quarter of their value so far this year. 

Emerging Equity Trust shareholders will vote on the proposal in the coming weeks, according to the statement. If approval is granted, the fund is expected to be placed into voluntary liquidation by the end of November.

(Adds details of industry performance in fifth paragraph.)

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