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Nigel Legge

The investment boutique chief who once bought a curry for his staff’s Christmas party tells James Phillipps that a good working environment is key to retaining top fund managers

Liontrust chief executive Nigel Legge says he has learned a lot in his 10 years at the helm, not least that having curry at your office Christmas party makes the place smell for weeks afterwards.

It is hard to imagine Legge and fellow founding director John Harbottle having a curry to keep down costs at the party years ago. However, the asset management firm has come a long way in its first decade and now has 4.5bn under management.

Legge says: “When we started, the whole concept of a boutique was unknown. The big firms dominated but that is completely different now. There is much more space for smaller players.”

Despite the proliferation of boutiques, he is adamant that no one has yet emulated the Liontrust business model, which is lean enough for it to have just 36 staff.

Legge says a lot of people have rung to ask him how to set up a fund management business. “Over the years, we have had a lot of people ask us how to do it but nowadays we would probably invoice them. There is no right or wrong way. Our path just suits us.”

He says the key factor at Liontrust is that it runs only four types of product, under-pinned by four investment processes. Product launches tend to be driven by the fund managers’ desire to run them rather than the marketing trends of the day.

“There is reputation risk in all product development. For example, the first opportunities fund was Anthony Cross’s idea and he came up with its process documents. We do not want lots of products with little cash in them.”

This focused approach seems to suit the staff. Bucking the industry trend, Liontrust’s UK equity desk have all run their respective funds since launch. First income fund manager Jeremy Lang has been with the firm for 10 years, small-cap manager Anthony Cross for eight years and large-cap manager Bill Pattison for six years.

Besides Legge and Harbottle, Liontrust’s chief operating officer, chief financial officer, head dealer and key account director have all also been there since launch.

Legge says: “When you consider that 60 per cent of UK equity managers have changed jobs in the past three years, these companies must be getting something wrong. You have to get your remuneration packages right but you also have to get the working environment right. Our staff turnover is evidence that other people must be looking at the wrong thing.”

Incentive packages are a hot topic, with both Investec and Neptune introducing profit-share deals in a bid to attract and retain top staff. Legge emphasises the importance of the atmosphere at Liontrust in terms of staff retention but its salary packages are not bad either. At results’ time, the firm strips out 55 per cent of its operating profits to pay its salaries. Twenty per cent goes to the fund managers and the remainder, after all other staff costs, makes up the bonus pot. The fund managers have equity in the business, options over 3 per cent of the firm and get 20 per cent of management fees on their funds.

Considering that Lang’s First income fund is a 1.2bn supertanker, that adds up to a fair old whack. Enough to buy him a luxury yacht and holiday home in Canada, in fact.

Legge thinks investors should focus more on the stability of a firm and its management team before investing in a fund. This is part of the firm’s marketing push.

He insists that fund managers are open and honest with their investors in good and bad times. Cross and his opportunities fund have been flying of late but Lang’s First income fund has struggled over the past couple of years.

“Our growth and large-cap styles have had a difficult two years but are ahead of their benchmark in 2005. We are confident that the market today has got more of the characteristics which will suit our style than has been the case in the past two years. The long-term track records remain fantastic and a wobbly two years out of 10 is not a bad record,” says Legge.

He has had a stab at a few different jobs in his time – the most novel being as a body double and stand-in for Lauren Bacall’s son Sam Robards in an adaptation of Shakespeare’s The Tempest – but he insists that he loves his current role.

He has also spent winters strumming the guitar for his supper in alpine ski lodges and worked on cruise ships in the summer but finally seems to have found his niche.

Born: Barnstaple, Devon

Education: Charterhouse School

Lives: Outside Winchester

Career: Aviation insurance sales at Willis Faber & Dumas; two years travelling round Europe; Henderson; James Capel; chief executive at Liontrust for the past 10 years

Likes: Sport, late nights, partying, his job, his family and strumming

Dislikes: Know-it-alls, pomposity, arrogance and duplicityDrives: Subaru Outback

Favourite book: When Genius Failed by Roger Lowenstein

Favourite album: Exile on Main Street by the Rolling Stones

Favourite film: Soldier Blue

Hero: Jose Mourinho

Life ambition: “To carry on what I am doing”


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