Fundsmith Emerging (FEET) - Crazy idea?

[jaizan]

I shall be wary of investing in any other Fundsmith products.

1 An investment trust already has dealing facilities, so rather than offload the whole lot to a liquidator who has taken a long time to do the job, why did Fundsmith not take responsibility to wind down the trust themselves in an orderly fashion ?

2 If the Fundsmith quality investing strategy is that good, it ought to work in emerging markets. It hasn't. Fundsmith have shut it down, so it's no longer there visibly spoiling their performance record.

[simoan]

I shall be wary of investing in any other Fundsmith products.

1 An investment trust already has dealing facilities, so rather than offload the whole lot to a liquidator who has taken a long time to do the job, why did Fundsmith not take responsibility to wind down the trust themselves in an orderly fashion ?

2 If the Fundsmith quality investing strategy is that good, it ought to work in emerging markets. It hasn't. Fundsmith have shut it down, so it's no longer there visibly spoiling their performance record.

Personally, I have never had any interest in investing in Emerging Markets because of the exact same issues that Fundsmith discovered could not be overcome and were bad for total returns. I'm not sure it was ever a good idea but at least it provided the opportunity I detected at the start of this thread when you could buy in at a large discount to NAV.

On the contrary to what you write, I find it re-assuring that Fundsmith were honest enough to admit it did not work and to close the fund and return investors money. IMHO no-one has to have exposure to emerging markets to make money from equities. Of course, several Fundsmith directors, including Terry Smith, had substantial stakes in the company putting their money behind the idea in line with other investors. I can think of IT's where the manager has no great stake in the company and keeps an underperforming trust running for years whilst fleecing investors and keeping themselves and their mates in cushy employment! That's what I call dishonest.

As for the timescale of the liquidation, I agree it's been disappointing but they did partially sell down more liquid positions before the liquidator was involved, but assume they legally have to use a third party liquidator in accordance with Company Law.

[RajK]

Has anyone had a cash deposit appear in their II account. I cant figure out for the life of me where this has come from except maybe the final liquidition payment from my FEET holding. I cant see any news on the FEET website however.

[terminal7]

Has anyone had a cash deposit appear in their II account. I cant figure out for the life of me where this has come from except maybe the final liquidition payment from my FEET holding. I cant see any news on the FEET website however.

As of 11.50 am - nothing

T7

[RajK]

Yes its totally wierd as nothing has appeared in the transaction history to tell me what it is. Oh well maybe II have made a boo boo and it will dissapear in due course.

[Steveam]

I held FEET with both IWeb & HL and neither are showing unexpected receipts.

Best wishes,

Steve

[RajK]

Hi Guys

i have recently received a corporate action form interative Investor , who i hold my FEET shares on. The pprevious two distrubtions that i got form FEET where deposited within the ISA it is held. However i am now receiving this notice

FUNDSMITH EMERGING ORD GBP0.01
Event TypeConfirmation
DescriptionConfirmation - ISA Ineligibility

Due to restrictions imposed on ISA accounts, unlisted shares are not considered an ISA-qualifying investment. Therefore, we will arrange to move your Fundsmith Emerging Equities Trust plc shares to a linked trading account, opening one on your behalf if you do not already have one. If that is not possible, we may attempt to withdraw the shares into certificated form, reregistering them into your own name. Certificates received in respect of ISA accounts will no longer be held within the tax efficient wrapper, so will lose any tax benefits.

I see from previous conversation that other have received something similar . I do not understand why Interactive Investor are telling me this now. Are they really going to move the holding to my Trading Account and then the final distribtion will be deposited there?

Cheers

Raj

[Alaric]

I see from previous conversation that other have received something similar . I do not understand why Interactive Investor are telling me this now. Are they really going to move the holding to my Trading Account and then the final distribtion will be deposited there?

That was the inference I drew from the notification.

[Lootman]

I see from previous conversation that other have received something similar . I do not understand why Interactive Investor are telling me this now. Are they really going to move the holding to my Trading Account and then the final distribtion will be deposited there?

That was the inference I drew from the notification.

And how will that final distribution be handled for tax purposes?

Since I held FEET in an ISA I kept no tax records for the position.

[scrumpyjack]

Once a security ceases to qualify for an ISA, it has to be moved out within 30 days. This situation is in progress in my case with Ediston which was liquidated on 11th Jan. HL have confirmed that the liquidation proceeds payable at the end of this week will be paid to my ISA. But the small final payment on completion of the liquidation in 6 or 9 months time will be paid to me personally and not in the ISA. I don't think that will lead to any tax consequences as the payment will be simply settlement of liquidation proceeds and not be a taxable event.

With FEET, I guess whether the cash stays in the ISA or is paid outside the wrapper depends on the timescale between ceasing to be ISA qualified and the cash payment (and also on the competence of your broker!)

[Lootman]

the small final payment on completion of the liquidation in 6 or 9 months time will be paid to me personally and not in the ISA. I don't think that will lead to any tax consequences as the payment will be simply settlement of liquidation proceeds and not be a taxable event.

Yes, I think I will take the view that this is merely a transfer of cash out of my ISA, and therefore is not a tax event.

[doug2500]

Iweb kicked them out ages ago so different brokers view this a bit differently.

I think I'll just have to treat it as a removal of funds from isa too. No idea how else to treat it.

It's a proper pain though.

[Lootman]

Iweb kicked them out ages ago so different brokers view this a bit differently.

I think I'll just have to treat it as a removal of funds from isa too. No idea how else to treat it.

It's a proper pain though.

Makes me wonder what a broker would do if you only had an ISA with them, and no taxable account?

So would they forcibly open a taxable account in your name, to transfer the residual holding/obligation to? Or would they just post you a cheque later?

[Alaric]

Makes me wonder what a broker would do if you only had an ISA with them, and no taxable account?

So would they forcibly open a taxable account in your name, to transfer the residual holding/obligation to? Or would they just post you a cheque later?

As posted earlier, this is what ii would do.

Therefore, we will arrange to move your Fundsmith Emerging Equities Trust plc shares to a linked trading account, opening one on your behalf if you do not already have one. If that is not possible, we may attempt to withdraw the shares into certificated form, reregistering them into your own name.

[doug2500]

Disappointing lack of communication here. Fair enough if it's taking longer but an update wouldn't go amiss.

[simoan]

Disappointing lack of communication here. Fair enough if it's taking longer but an update wouldn't go amiss.

Agree. It’s very frustrating but I have learnt something for the future should I be in the same position and will likely just sell in the market before the company gets delisted and skip the liquidation phase. Time value of money is more important than squeezing out a little bit more profit. A bird in the hand and all that… I can’t imagine Terry Smith is happy about it either but that’s little consolation.

[Spet0789]

Disappointing lack of communication here. Fair enough if it's taking longer but an update wouldn't go amiss.

Agree. It’s very frustrating but I have learnt something for the future should I be in the same position and will likely just sell in the market before the company gets delisted and skip the liquidation phase. Time value of money is more important than squeezing out a little bit more profit. A bird in the hand and all that… I can’t imagine Terry Smith is happy about it either but that’s little consolation.

A further irony is that after years of lagging the indices by being overweight India vs underweight China, that position would have done really well over the past 12 months.

[simoan]

Agree. It’s very frustrating but I have learnt something for the future should I be in the same position and will likely just sell in the market before the company gets delisted and skip the liquidation phase. Time value of money is more important than squeezing out a little bit more profit. A bird in the hand and all that… I can’t imagine Terry Smith is happy about it either but that’s little consolation.

A further irony is that after years of lagging the indices by being overweight India vs underweight China, that position would have done really well over the past 12 months.

Yes, no need to rub it in! OTOH you could have recycled the cash returned so far into those regions should you have wished.

[Gilesyb27]

Iweb kicked them out ages ago so different brokers view this a bit differently. .

Interestingly I came on here, to see if anyone had any news, as FEET is still showing on my Iweb SIPP..... Presumably rules are different for Sipp vs ISA and more problematic for them to move either a holding or cash out of my pension!

[doug2500]

Iweb kicked them out ages ago so different brokers view this a bit differently. .

Interestingly I came on here, to see if anyone had any news, as FEET is still showing on my Iweb SIPP..... Presumably rules are different for Sipp vs ISA and more problematic for them to move either a holding or cash out of my pension!

I think the problem is that in an ISA you can't hold unlisted securities hence the ejection. Presumably you can in a SIPP? I seem to remember you can own cars and paintings in a pension.