Terry Smith's trust raises £60m in one month

Terry Smith's trust raises £60m in one month

Fundsmith’s Smithson investment trust has issued shares worth £60m in the past month as the popular trust battles to keep its premium down.

A series of stock exchange announcements since December 7 show the trust has issued 3.6m new shares, priced between £16.26 and £17.34 a share, in the month to January 5, a move which will bring £59.7m of new investment to the trust.

Smithson has issued stock on a regular basis since its launch in 2018, and FTAdviser understands the managers will continue to pursue the same investment strategy with the new funds raised.

According to Darius McDermott, managing director at Fund Calibre, the high demand for the trust means if the board did not issue more shares on a regular basis, the price of the trust would move to a substantial premium.

Data from the Association of Investment Companies shows the Smithson trust is trading at a 3.6 per cent premium — where the price of the trust is higher than the sum of its assets — despite 12 new issues of equity in the month to January 5.

Launched in October 2018 and managed by Simon Barnard and Will Morgan, Smithson broke Neil Woodford's record for the largest trust launch in the UK, raising £822m. 

Star fund manager and founder of Fundsmith, Terry Smith, had originally targeted £250m for the trust but was forced to raise that figure on multiple occasions due to "significant demand".

Mr Smith does not manage the fund but oversees the strategy in his role as chief investment officer.

The Smithson trust invests in global companies with a market cap of between £500m and £15bn, with the average being £7bn.

Tom Sparke, investment manager at GDIM, said now was a good time to be raising funds for globally diverse small- and mid-cap investments.

Mr Sparke said: “The global growth rate is set to rise substantially this year, with projections around 6 per cent.

“Typically, smaller companies have outperformed their larger counterparts in these times of expansion and this year should be no different. Investment trust structures also have the power to use gearing which can optimise the returns from potent growth stocks.”

Smithson has returned 33 per cent over the past year, just slightly below its peers’ average of 34 per cent in the Global Smaller Companies AIC sector.

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