Rob Burnett Unveils First Fund From Lightman Investment Management

Burnett, who left Neptune in December after 16 years - 13 of which were spent managing the Neptune European Opportunities fund - will run a European equities mandate at Lightman. 

The Lightman European fund will be a concentrated, high-conviction portfolio of 40 to 50 European equities that will seek to outperform its benchmark, the MSCI Europe ex UK index. It will have an active share of over 80% and a tracking error of 5% to 8%.

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The team will take a minimum two-to-three-year view, investing in companies valued at low price-to-book and price-to-earnings ratios with high free cash flow yields, while avoiding companies at high valuation ratios. The fund is expected to yield upwards of 3%.

Burnett described the team's investment style as "quite contrarian", investing in companies "with positive operational momentum that are reinforcing strong valuation characteristics".

Structured as an OEIC, the fund will have both retail and institutional share classes.

For retail investors the ongoing charges figure (OCF) will be 80bps, while the institutional share class will have an OCF of 60bps and an early bird offer waiving the £100m minimum investment. Both share classes will have income and accumulation options. 

The fund will launch with seed capital including investment from the four-strong Lightman team.

"We hope we can launch with a reasonable amount," Burnett said.

Timing

While some may question the judiciousness of launching the business at this juncture - European stockmarket performance has been dire for over a decade versus the US, while Brexit negotiations are blundering on - Burnett is sanguine on the timing.

"I have always wanted to run my own business and have thought about it for some time," he said.

"I have been waiting for the moment when it felt sensible to do it. There were personal and practical considerations but I also believe the difficult decade European equities have had - both in general and relative to US equities in particular - is anomalous in the context of history.

"We wanted to launch the fund after a bad period. European equities are more likely to have a good decade after a difficult one."

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He added: "We cannot predict the outcome from Brexit as there are so many variables but we do not believe it will be a problem for European equities as support for the euro is among the highest it has ever been, according to the European Commission's Standard Eurobarometer.

"Europeans want to preserve the euro. Broadly speaking, political risks are overblown."

Indeed, Burnett is so phlegmatic towards Brexit, the launch of the Lightman European fund could well coincide with the UK's exit from the European Union, slated for the end of March.