Liontrust is to launch an actively managed FTSE 100 tracker run by William Pattisson. The Indextra...
Liontrust is to launch an actively managed FTSE 100 tracker run by William Pattisson.
The Indextra fund will strip out those companies Liontrust expects to be the losers in the benchmark and then track the remaining stocks.
Although it is expected to remove 20-25 stocks at any one time, this can go significantly higher if required. The only constraints on the portfolio are the normal unit trust rules on the size of holdings.
Liontrust will choose the losers based on Pattisson's existing large-cap investment process. This judges stocks against three criteria: three-month earnings forecast revisions, share price momentum and news flow analysis.
'Currently we are in the process of looking back at the last 40 quarters to see whether if we had applied that criteria to those stocks and taken them out of the index, this would have led the remaining index members to outperform the index as a whole. Early indications are that they would,' said Jonathan Harbottle, marketing manager at Liontrust.
Fees on the fund will reflect the fact that it falls half way between a tracker and an actively managed fund. Although not finalised, these are likely to be around 1%-1.25%pa.
The process would be reviewed quarterly and any dealing will also take place once a quarter. Therefore if a stock were to go sour, Liontrust would still wait for the quarterly dealing to make a change.
The Indextra fund is pencilled in for launch in the first quarter of 2003 and in the meantime Liontrust has shelved its plans to launch a mid cap fund. Harbottle said current market conditions meant the time was not right. The fund was to be managed by Anthony Cross, manager of the Liontrust Intellectual Capital fund.