Terry Smith has announced plans to raise up to £250m for a new investment trust that will focuses on global small- and mid-cap companies.
The Smithson Investment Trust will launch its initial public offering in mid-October and the company’s investment manager will be Fundsmith, the asset management house launched by Smith in 2010. Fundsmith runs the Fundsmith Equity fund, which has built up a very strong track record since launch.
Performance of fund vs sector and index since launch
Source: FE Analytics
Investors in the trust will not have to pay any launch fees as Fundsmith will bear all the costs associated with its launch – meaning every £10 invested in the IPO will result in shareholder receiving £10 of value on the first day of trading.
Furthermore, its 0.9 per cent annual management charge will be based on Smithson’s market capitalisation, not its net asset value, in order to align “the interests of the investment manager with shareholders”.
Smithson’s investment management team will be led by Simon Barnard as investment manager while Will Morgan has been named as assistant investment manager. Smith will provide advice and support to the team in his capacity as chief investment officer of Fundsmith; he will also invest £25m in the trust at launch with another £5m coming from Fundsmith partners and employees.
The portfolio will be built around small- and medium-sized companies between £500m and £15bn in market capitalisation; the average market cap for the trust’s holdings is expected to be around £7bn.
Barnard said the team behind the trust has identified an investable universe of 83 companies but that the portfolio will choose around 25 to 40 of these at launch.
Smith (pictured) added: “Last year we hired Simon Barnard and Will Morgan from Goldman Sachs to research the opportunity presented by applying Fundsmith’s proven investment process to companies typically smaller than the ones the Fundsmith Equity fund would invest in, hence the name Smithson.”