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Liontrust chips in with large-cap fund

Liontrust has soft-launched a concentrated large-cap fund to capitalise on what it believes are the most favourable market conditions for blue chips in five years.

The Liontrust MMV fund, so-called because of its launch at the end of 2005, was rolled out without any fanfare to enable it to build up a track record before the group decides whether to market it to the wider IFA market.

The portfolio, managed by Liontrust first large-cap fund manager Bill Pattisson, was introduced with a 50,000 initial investment. Any retail rollout will see this amount reduced and a likely rebrand of the fund.

Pattisson is confident that large caps are well positioned to outperform in the next few years, saying small and mid-caps are relatively expensive.

He says the FTSE 100 index is trading on a price/earnings ratio of 15 and offers significantly more opportunities than the FTSE 250, which is trading on a p/e of 20.

The fund will be run using Pattisson’s large-cap process, which looks for stocks with positive three-month earnings’ forecasts from brokers, top-quintile price momentum and a greater number of analyst upgrades than downgrades.

Pattisson will hold between 30 and 50 equally-weighted stocks and will not be benchmark constrained although he aims to outperform the FTSE Total Return index on a rolling three-year basis.

He will be able to use cash aggressively and move up to 50 per cent into this asset class if market conditions turn adverse. This will differentiate the fund from the first large-cap fund, which is benchmark- constrained and run on a sector-neutral basis.

Charges are 5 per cent initial and 1.5 per cent annual, with standard IFA commission.

Marketing director Jonathan Harbottle says: “The FTSE 100 is underpriced relative to the FTSE 250 but few investors are looking at large caps so we have gone for a soft launch but will review this later.”


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