Terry Smith: Liquidity partly to blame for FEET's cautious start

Low liquidity, US monetary policy risk and steep valuations in India are the reasons why over 20% of the Fundsmith Emerging Equities trust remains uninvested almost a year after launch, according to manager Terry Smith.

The Fundsmith Emerging Equities trust (FEET) was launched last June having raised £193m, but as of 29 May 2015 just 78% of its portfolio had been invested, spread across 49 companies. FEET remains popular with investors; it is one of the few trusts in the AIC's emerging markets sector to trade on a premium, which stood at 5.7% as of 11 June. But performance has lagged its MSCI Emerging Markets benchmark since launch. According to FE Trustnet, the trust has shed 1.6% since 25 June last year, compared with a 4.7% return for the index. Smith (pictured) said that liquidity constrain...