OBSR removes AA ratings on Liontrust funds

Old Broad Street Research has removed its AA rating from Liontrust’s First Growth, First Large Cap and First Income funds.

Note: This story was updated at 4:20pm.

Old Broad Street Research (OBSR) has removed its AA rating from Liontrust’s First Growth, First Large Cap and First Income funds with immediate effect, as it emerged that the funds’ managers, Jeremy Lang and William Pattisson, will leave the firm next month.

Lang and Pattisson announced their resignations in January but at the time Liontrust said they would remain at the firm until January, 2010. However, yesterday it said they would depart on April 15.

Gary West and James Inglis-Jones are to manage Liontrust First Large Cap and First Income, while Anthony Cross and Julian Fosh will take over Liontrust First Growth. All are already managers with the firm.

Nick Whalley, a senior investment research analyst at OBSR, says the consultancy had made the move because of the “very specific” nature of Lang and Pattisson’s approach, but that the rating could be restored if the funds’ new managers perform well.

“We rate the Intellectual Capital Trust, the smaller companies vehicle run by Anthony [Cross] and Julian [Fosh]. We’re familiar with them, and their rating [an A rating] is a statement of confidence in them. But they run that fund with a bespoke approach; it’s very different from Jeremy’s approach with the growth fund. It’s unclear how they will be managing that fund,” says Whalley.

He adds, “Our Euro analysts are familiar with James [Inglis-Jones] and Gary [West] on the European side. That fund is not currently rated but the dialogue is continuing with them… to ascertain whether they should be rated.”

Whalley says the rating, a qualitative assessment of a fund and its managers, aims to “look forwards” and to judge whether a fund articulates and fulfils a “consistent and solid philosophy”. “Conviction grows over time,” he adds.

Mark Dampier, the senior fund analyst at Hargreaves Lansdown, says that he “wouldn’t advise investors to sell the funds”.

“But as for buying, I’d say wait and see,” he adds. “Gary West and James Inglis-Jones have done a very good job in Europe, so if this translates to the UK, they should do well. And Anthony Cross is also fine: I don’t see why Liontrust First Growth shouldn’t go well under him. We just need to see how they do.”

None of the three Liontrust funds feature on Hargreaves’ Wealth 150 list of recommended funds.

Lang and Pattisson have not yet specified whether they will move to another fund group.

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