25 Feb, 2008
Published: 11:32 Monday 25 February 2008
By: Matthew Goodburn, Investment Correspondent
F&C has been forced to find new seed
money for its UK 130/30 fund after its own Foreign & Colonial
investment trust withdrew its investment following fund manager
The £2.6 billion investment trust (FRCL), managed by Jeremy
Tigue, had seeded the fund with £50 million a month after its
launch but withdrew the seeding money soon after the departures of
rising UK equity stars Makis Kaketsis and Luke Newman at the end of
The pair's former Deutsche colleagues Peter Lees, F&C head of
UK equities, and Michael Ulrich took the reins of the fund but
Tigue withdrew his investment forcing F&C to find a replacement
£50 million from a different unnamed internal institutional
Tigue first made the investment from his £2.6 trust into
F&C Enhanced Alpha UK Equity last September a month after
launch. His conviction in the fund and managers was such that he
worked to persuade his independent board to get clearance to
include the long-short fund within the alternative portion of the
He told Citywire at the time: 'We felt the concept of 130/30 was
interesting and had considered other products, but when we found
F&C were launching one it rang our bell because Makis and Luke
have a proven track record.'
An F&C spokesman confirmed Foreign & Colonial investment
trust's seeding money had been withdrawn from the fund but said it
had been replaced by 'a similar amount of money' from within the
group's institutional business.
He added: 'This was a case of the trust's board carrying out due
diligence because two managers had left.'
The £50 million fund has beaten the market in each of the six
months since its launch, outperforming the FTSE All Share index by
4.21% over its first six months helped by overweight long positions
in resources stocks.
The fund has been long in oil related stocks since launch with long
positions in outperforming stocks such as Rio Tinto, Xstrata and
Aquarius Platinum. Short positions in Antofagasta and BHP Billiton
which have both relatively underperformed the index have also aided
It has also been underweight in financials stocks since launch with
its only UK-listed long position, Standard Chartered having beaten
the index by more than 10% since its initial purchase.
As first revealed by Citywire, former managers Newman and Kaketsis
are now running a global special situations hedge fund for absolute
returns house Altima Partners.