Terry Smith: ETF popularity has hindered performance on emerging equity trust

EMs saw significant ETF inflows

Fundsmith's Terry Smith has blamed the rise of ETFs for the "frustrating" underperformance in his Fundsmith Emerging Equities Trust (FEET) last year.

Speaking to investors this week, Smith (pictured) said actively-managed emerging markets funds had seen outflows of $20bn last year, which were then re-invested in emerging market ETFs, according to data from EPFR Global. The passive mandates then invest in the largest companies in the index, boosting the share price, which Smith said was done "irrespective of the quality or the valuation".  He gave the example of South Korean firm Samsung Electronics, which is the largest firm in the MSCI Emerging Markets index at 3.7%, but has faced a difficult time over devices exploding and catchi...