Threadneedle is to launch the Threadneedle (Lux) European Smaller Companies Absolute Alpha Fund. The UCITS III fund will give manager Philip Dicken (pictured) and his team flexibility in strategy and fund positioning and will offer investors access to an investment vehicle focused on alpha-generation in a regulated format.

Threadneedle has a broad range of absolute return products and strategies, and has more than 10 years’ experience in single strategy hedge funds. Alongside his proven shorting experience and track record of generating alpha under different market conditions, Philip has achieved first quartile performance on his long-only Threadneedle Pan European Smaller Companies Fund¹.

Working within the Threadneedle European smaller companies investment team², Philip will be supported by a solid operational infrastructure and independent risk analysis. The team will continue to work closely and draw investment ideas from Threadneedle’s 120 investment professionals who work across all asset classes and regions.

Dicken says: “This is an exciting time to leverage our expertise in delivering absolute returns for our clients. With the dislocations of the past few years still fresh in investors’ minds, the opportunity to add value through fundamental and valuation analysis with high conviction long and short positions is considerable.

“We are pleased to offer investors access to these opportunities in a regulated, liquid and transparent format. The Threadneedle (Lux) European Smaller Companies Absolute Alpha Fund enables a broader range of investors to access uncorrelated returns through the cycle.

“We are looking forward to capitalising on the opportunities that our research has uncovered, on both sides of the book, to deliver value for investors across a broad range of European mid and small capitalisation stocks. “

Campbell Fleming, Head of Distribution at Threadneedle, adds: “Threadneedle has a proven track record for delivering performance via absolute return funds. We believe that this fund will leverage our existing resources and experience to the next stage of development for absolute return. We have spoken extensively to our clients and they have indicated a great appetite for a product that will capitalise on the European smaller companies investment market in this form. The introduction of UCITS III regulation has triggered strong growth in the regulated absolute return sector and the migration of hedge fund strategies to the transparent, liquid and highly regulated UCITS market looks likely to continue to drive investor interest.”

The Threadneedle (Lux) European Smaller Companies Absolute Alpha Fund, which is a regulated UCITS III SICAV fund, will launch on the 3 March 2011. Along side this launch, Threadneedle is updating certain investment vehicles to refine its absolute return range in anticipation of reforms to the way products can be distributed in Europe. Consistent with this and with the new fund launch, the hedge fund Threadneedle European Smaller Companies Crescendo Fund has closed.