Over half of Smithson shareholders opt for cash exit 

Terry Smith’s Fundsmith faces a £967m exodus as nearly 60% of Smithson shareholders opt for a cash exit.

More than half of shareholders in Smithson (SSON) have opted for a cash exit rather than roll over into a new open-ended vehicle, following the board’s decision to liquidate the trust last year. 

The £1.5bn smaller companies trust, managed by Fundsmith’s Simon Barnard, first proposed converting into an Oeic back in November. 

The decision followed pressure from Saba Capital which had built up a 16% position on the register and questioned why the vehicle remained closed-ended if it wasn’t utilising the structure’s unique benefits, such as gearing or investing in private, illiquid assets.

Saba’s argument was bolstered by the fact that Smithson traded at a stubborn discount of around 10% throughout the year, despite having bought back 39.3% of shares in issue since April 2022. 

At the first of two general meetings to be held this month, the board confirmed that investors had approved proposals for the scheme of reconstruction and winding-up of SSON. In an update, it added that 58.6%, or over 62.9m of shareholders had opted to take a cash instead of rolling into the new vehicle. 

With the trust’s latest net asset value (NAV) per share standing at £15.35, QuotedData has calculated this equals a more than £967m loss of net assets for manager Fundsmith, with £682m transferring to the new fund. 

Terry Smith’s quality growth investment strategy has struggled in recent years, with his flagship £15.3bn Fundsmith Equity fund leaving behind its fifth year of underperformance against the MSCI World in 2025. Although, despite this, as of 31 December the asset manager still oversaw £24bn of assets. 

Speaking at a conference in London at the end of last year, Saba chief investment officer and founder Boaz Weinstein praised the SSON board for its decision, commenting that for managers like Smith who will lose ‘a little AUM’ as a result of such structural shifts, ‘the violins should be incredibly small’.

The liquidation process concludes this Friday, 27 February, with a second general meeting to formally appoint liquidators. This will trigger the payout for the cash-exit group and the final transfer of assets into the new Smithson Equity Fund, which is scheduled to begin daily trading on 2 March.