Star fund managers poached

STAR fund managers Nigel Thomas and George Luckcraft have shocked the investment industry by announcing they are defecting from investment house ABN Amro to Framlington.

Thomas, who runs ABN‘s UK Growth and UK Select Opportunities funds, has worked at the firm for 16 years while Luckcraft, manager of UK Equity Income and High Income, has been on board for 22 years.

But most importantly, both hold the top position in their respective sectors over the past three years, according to Citywire Funds Insider, a fund ranking system.

Thomas, in particular, has built up a reputation as one of the City‘s most skilled stock pickers, with his UK Growth fund returning 64% over the past three years (an average annual return of 18%) while the FTSE All-Share has fallen 9%.

Many investors have been piling into the funds ahead of Friday's end-of-tax-year Isa deadline on the basis of the managers' sparkling track records. Many may now regret that decision.

'It's a huge blow for ABN,' said Jason Hollands of fund broker Bestinvest. 'Their whole UK business was based around these individuals. Nigel Thomas has spent virtually his whole career there. But then I suppose everyone has their price.'

The managers are tied into ABN Amro for another 12 months, although the company is expected to release them before that date. 'The only good news for investors in these funds is that they don't need to make a decision just yet,' said Ben Yearsley of adviser Hargreaves Lansdown. In the meantime, ABN Amro has pledged to throw the necessary resources behind finding suitable replacements. Hargreaves Lansdown and Besyinvest, however, have suspended the ABN funds from its buy list until the new recruits are unveiled.

Framlington will transform its Capital Trust fund into a new special situations fund for Thomas while Luckcraft will take over several of the existing income funds. Framlington is yet to reveal which ones.

Details of the offer used to lure the pair away from ABN have not been revealed but Framlington admits each will have a 'real stake in the business'.

Framlington wants its mainstream funds to match the reputation of its specialist funds, such as the strong performing Framlington Health fund.

'The addition of George and Nigel to the team takes us nearer to that goal,' said Mike Vogel, chief executive of Framlington.

Vogel, an old friend of both managers, held secret talks with the pair for three weeks before they handed in their resignations last Thursday. He says neither are the type to 'tout themselves about' and had approached no other fund management companies. 'They were simply interested in the changes we have underway here at Framlington,' he added.