Invest In Fundsmith Emerging Equities Trust: A Beginner's Guide

Fundsmith Emerging Equities Trust plc is a closed-ended equity mutual fund launched by Investec Bank Plc and managed by Fundsmith LLP. The fund invests in public equity markets of emerging and developing market countries across the globe, focusing on companies with predictable revenues, low capital intensity, high returns on capital, and strong market positions. The fund benchmarks the performance of its portfolio against the MSCI Emerging Markets Index. It was formed on October 31, 2013, and is domiciled in the United Kingdom.

Fundsmith Emerging Equities Trust is a closed-ended equity mutual fund

A closed-end fund generally does not continuously offer its shares for sale but instead sells a fixed number of shares at one time. The fund typically trades on a market such as the New York Stock Exchange or the NASDAQ Stock Market. The price of closed-end fund shares that trade on a secondary market after their IPO is determined by the market and may be greater or less than the shares' net asset value (NAV). Shares that sell at a price higher than the NAV are considered to be sold at a premium, while those selling at a lower price are considered to be sold at a discount.

Closed-end funds are usually actively managed and focus on a single industry, sector, or region. They have a manager who oversees the portfolio and actively buys, sells, and holds assets. The shares of closed-end funds fluctuate in price throughout the trading day, similar to stocks and ETFs. However, the fund itself will not issue or redeem shares daily.

The "closed-end" structure has several implications. Unlike open-end mutual funds, closed-end fund managers do not face reinvestment risk from daily share issuance and do not have to hold excess cash to meet redemptions. This stable capital base allows closed-end funds to invest in illiquid securities and issue debt and/or preferred shares.

The fund is managed by Fundsmith, LLP and was launched by Investec Bank

Fundsmith Emerging Equities Trust is a closed-ended equity mutual fund launched by Investec Bank Plc. The fund is managed by Fundsmith, LLP and was launched by Investec Bank. It invests in public equity markets of emerging and developing market countries across the globe. The fund seeks to invest in stocks of companies that are operating across diversified sectors. The fund was formed on 31 October 2013 and is domiciled in the United Kingdom.

Fundsmith, LLP and Investec Bank Plc have created an investment policy to invest in companies that, in the opinion of the Investment Manager, have the majority of their operations in, or revenue derived from, developing economies. The Investment Manager intends to identify companies that generate their revenue from a large number of everyday, repeatable, and relatively predictable transactions. The fund focuses on factors such as predictable revenues, low capital intensity, high returns on capital, strong market positions, and the degree of economic freedom of the country of listing to create its portfolio.

The Investment Manager will avoid the financial sector and heavily cyclical sectors such as construction, manufacturing, utilities, resources, and transport. Instead, they will focus almost exclusively on consumer stocks and only invest in stocks that will benefit from the rise of the consuming class in the developing economies. The companies in which the fund invests have relatively predictable revenues and low capital intensity, with correspondingly high returns on capital. The targeted companies will also deliver most or all of their profits in cash.

The fund's portfolio is global, and many of the investments are not denominated in GBP. There is no currency hedging by the fund, so the GBP price of the shares may rise or fall due to exchange rate movements. The fund's portfolio complies with the UCITS requirements on the spread of investment.

It invests in public equity markets of emerging and developing market countries

Fundsmith Emerging Equities Trust plc is a closed-ended equity mutual fund that invests in public equity markets of emerging and developing market countries. The fund was launched by Investec Bank Plc and is managed by Fundsmith, LLP.

The fund's investment strategy focuses on companies operating across diversified sectors, aiming to identify stocks with predictable revenues, low capital intensity, high returns on capital, and strong market positions. The fund seeks to benefit from the rise of the consumer classes in emerging markets and benchmarks its performance against the MSCI Emerging Markets Index.

The Investment Manager of Fundsmith Emerging Equities Trust avoids sectors such as finance, construction, manufacturing, utilities, resources, and transport. Instead, they focus on consumer stocks and companies that will benefit from the growing consumer base in developing economies. The fund targets companies with defensible and robust market positions, often derived from brands, trademarks, and distribution systems or networks.

Fundsmith Emerging Equities Trust was formed on October 31, 2013, and is domiciled in the United Kingdom. It is cognisant of the additional risks associated with investing in developing economies and takes into account the degree of economic freedom in the respective countries when assessing investment opportunities.

The fund seeks to invest in stocks of companies operating across diversified sectors

Fundsmith Emerging Equities Trust plc is a closed-ended equity mutual fund launched by Investec Bank Plc. The fund is managed by Fundsmith LLP and invests in the public equity markets of emerging and developing market countries across the globe.

The fund's portfolio is global, and many of the investments are not denominated in GBP. There is no currency hedging by the fund, so the GBP price of the shares may rise or fall due to exchange rate movements. The portfolio complies with UCITS requirements on the spread of investment, but the application of the investment criteria significantly limits the number of potential investments. The fund generally invests in 20 to 30 stocks, so the performance of a single stock can have a greater effect on the fund's price.

Fundsmith surprised shareholders by announcing a voluntary liquidation of its Emerging Equities Trust in 2024, citing that it had "fallen below our expectations". The liquidation was expected to be completed by the end of November 2024, after Fundsmith published a circular outlining the wind-down process and conducted a shareholder vote.

The fund benchmarks the performance of its portfolio against the MSCI Emerging Markets Index

Fundsmith Emerging Equities Trust plc is a closed-ended equity mutual fund launched by Investec Bank Plc and managed by Fundsmith, LLP. The fund benchmarks the performance of its portfolio against the MSCI Emerging Markets Index. The fund invests in public equity markets of emerging and developing market countries across the globe. It seeks to invest in stocks of companies that are operating across diversified sectors. The fund focuses on factors such as predictable revenues, low capital intensity, high returns on capital, strong market positions, and the degree of economic freedom of the country of listing to create its portfolio.

The MSCI Emerging Markets Index is designed to help investors measure the return in rapidly growing economies around the world. MSCI has worked extensively to provide insight into this landscape, with over $1.3 trillion in assets under management currently benchmarked against their emerging markets (EM) indexes. The index was launched in 1988 and has since undergone changes to adapt to the evolving EM opportunity set, covering ESG, climate, factor, and thematic topics.

Countries have been added and removed from the MSCI Emerging Markets Index over the years based on MSCI's market classification framework, which assesses economic development, size and liquidity, and market accessibility. The index is designed to help investors better understand the new market fundamentals and the impact of geopolitical shifts, such as the growing economic power of China and India.

The Fundsmith Emerging Equities Trust plc was formed on October 31, 2013, and is domiciled in the United Kingdom.

Frequently asked questions