Comments on: Fundsmith Emerging Equities: Still Work-In-Progress?

By: ITinvestor

ITinvestor — Fri, 11 Jun 2021 09:13:24 +0000

In reply to J.

Thanks, J. I’m always amazed by just how different emerging market and developed market returns have been over time. Some great charts showing that here: https://www.longtermtrends.net/emerging-vs-developed-markets/

Interestingly, the returns have been very similar for the past 2 years – I wonder how long that will continue though?

By: J

Wed, 09 Jun 2021 15:32:37 +0000

Thank you for this. I have long been put off by the emerging markets tag after getting frustrated by Templeton many many years ago. I more recently stuck with Vanguard VFEM and whilst not making any direct comparison I feel happier with that. I kept looking at FEET but happier I stuck with Smithson.

By: ITinvestor

ITinvestor — Wed, 09 Jun 2021 11:31:29 +0000

Thanks, Tom.

I should have mentioned in the article that I held the JPMorgan trust for several years, mostly while emerging markets were struggling, and it still managed to deliver a decent return. Austin Forey has done a great job and I think he’s been running it since 1994.

I suspect FEET taught Fundsmith a few harsh lessons in its early years and they put these into effect when they launched Smithson.

By: tom_grlla

tom_grlla — Wed, 09 Jun 2021 10:56:53 +0000

Appreciate your ever-thorough overview as ever. I keep wanting this to turnaround, and it looks like it’s going in the right direction, but isn’t quite there yet.

It seems to me that they didn’t know what they were doing (compared with the main fund) at the start. It also looked, portfolio-wise, that they were basically just copying Arisaig, the EM Consumer specialists.

Arisaig have pivoted in recent years to EM tech giants, and it’s interesting to see FEET gradually doing the same. Arisaig explain themselves much better – it’s hard to know FEET’s thinking as clearly.

The country weighting is more like Pacific Assets, though even they added to China in the past year. I understand the historic reluctance, but there are too many great businesses to avoid it now, I think.

It’s good that FEET are getting rid of the Frontier stuff, which hasn’t worked & the most of the multi-nationals (ditto). Overall, the portfolio looks really strong to me – my only concern is that there are some nosebleed valuations in some of the quality stuff.

And I know it’s subjective, but I’d love it if they got rid of the Tobacco…

Overall, it stays in my ‘too hard’ pile. The portfolio looks great now, but I’d want to see the performance improve and, most importantly, a higher conviction in the fund managers’ investment strategy.

I know Fundsmith don’t like to go into detail (I suspect as most of their Retail investors aren’t interested), but I just don’t get what they’re doing here.