ABN calls truce with Framlington

THE fund management arms of ABN Amro and rival Framlington have called a truce, clearing the way for two of the City‘s top money managers to switch firms.

ABN was due to take Framlington to the High Court next week over the shock defection of its former stars Nigel Thomas and George Luckraft. The two ran £1.2bn of ABN's £1.5bn retail funds.

The firms have not revealed the terms of their settlement, saying merely that the spat had been resolved 'on terms satisfactory to all parties'.

Thomas, former manager of ABN UK Growth and Select Opportunities, and Luckraft, who ran High Income and Equity Income, gave 12 months notice in March. But they walked two months later, blaming an 'irrevocable breakdown' in their relationship with the Dutch firm. ABN denied any breach of contract.

Meanwhile financial advisers, concerned that the performance of the ABN funds could dip with the managers' departure, told investors to stay clear, triggering an outflow of £98m from ABN funds.

ABN attempted to stem the flow by buying rival fund manager Artemis and putting its well-respected managers in charge of the ABN funds. The deal convinced most advisers to switch back their recommendations to buy.

Thomas and Luckraft will remain on 'gardening leave' - at home but on full pay - at Framlington until 8 September. Thomas will then take charge of the £77m UK Select Opportunities fund, formerly Capital, and Luckraft will run the £61m UK Equity Income fund, formerly Extra Income Trust, plus the £38m Monthly Income and £30m UK Bond funds.

The duo picked up their star status after delivering blistering returns at ABN. Figures to the end of May show Thomas' ABN UK Growth fund returned 128% over five years, compared with 28% for the FTSE All-Share. Luckraft's Equity Income returned 135%.