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The fund couple

Like the double-act of Walter Matthau and Jack Lemmon, Framlington&#39s new star fund managers Nigel Thomas and George Luckraft chat with the ease of two men who have worked together for 20 years.

Both are clearly uncomfortable about the furore surrounding their well publicised and acrimonious move from ABN Amro to Framlington and are looking to put the past behind them and get on with managing their new funds.

Speaking for Luckraft, Thomas points out that the new job is only Luckraft&#39s second ever.

Now that Thomas and Luckraft are part of a wider team, a new experience for them is the Framlington midweek meeting, where a fund manager has to justify to all his colleagues the line he is taking.

“We have to sing for our supper – never done that before,” says Luckraft.

Another aspect of Framlington that Luckraft welcomes is that it is just a fund management company rather than a ponderous global entity.

“I don&#39t need to look after every Dutchman that comes through town,” he says.

Did leaving ABN Amro make them feel guilty?

“Oh yes, and we suffered sleepless nights leading up to our decision,” says Luckraft, adding that the two of them were a team at ABN Amro.

He says it is an indication of how uncomfortable that things had become that both felt able for the first time to accept an approach made to them.

At one point, things got so bad – after an injunction was slapped on them by ABN Amro – that Luckraft&#39s daughter asked if “daddy really was going to jail?”.

Both Thomas and Luckraft are adamant that they do not want to have to speak to lawyers again and they have no intention to move in the future. They both have the same one-year notice period that they had at ABN Amro, which they admit is not really enforceable.

Further reassurance comes from the fact that the two have put part of their pensions into the Framling-ton funds they are running. They also have equity stakes although these have involved them dipping into their own pockets.

Yet both praise the way that ABN Amro dealt with the blow of their departure by merging with Artemis. Thomas says it is an excellent deal and he will keep money invested in their funds. But he also feels that Framlington is doing the right thing by offering ABN Amro unitholders free transfers to the new funds run by Thomas and Luckraft.

In their four months of enforced vacation on gardening leave, the two spent their time differently. Thomas took the opportunity to switch off whereas Luckraft assiduously read the papers, eager to return to work. He says his wife and the nanny are happy to have him out of their hair.

Both say the different markets they have returned to are a challenge and accept that there is some fine-tuning to be done on the funds that they now manage.

Thomas, who has little exposure to the FTSE 100, says a level of 3,600 represents fair value and only once it hits 3,000 will stocks look cheap.

Luckraft will manage three funds. He says the high-income fund is fairly close to where he wants it, containing many of his old favourites.

The equity income and monthly income funds both currently invest more than 50 per cent in the FTSE 100, which he is looking to reduce to about 35 per cent, in particular the 15 per cent holdings in banking stocks, GlaxoSmithKline and BP, which he intends to cut to 4 per cent, but not at current prices.

He is in no hurry to buy until he has met with the small and medium-sized companies that take his interest.

Thomas&#39s UK select opportunities fund has seen its holdings cut from 120 to 83 since he took up the reins. The tricky markets mean it could be up to nine months before his stamp is fully on the fund but the initial work has been done. He is careful to warn investors that he may not beat the All-share benchmark in the first year.

But Luckraft interjects to point out that Thomas said that last time too and then his new ABN Amro equity income fund showed a positive performance after year.

Thomas thinks that is impossible in the current climate but a lot of people will be scrutinising his performance carefully and with great expectation.


Norwich Union – Prosper Bond

Tuesday, 1 October 2002 Type: Guaranteed income bond Minimum-maximum investment: £5,000-no maximum Term: Four years Guarantee: Capital returned in full providing index does not fall by more than 20% over the term Return: 6% net a year paid monthly, annually or at end of term Closing date: November 13, 2002 Commission: None Tel: 0845 9444800

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