Henderson to launch European fund

The fund will be run by Richard Pease, lead fund manager of the £468.8m New Star European Growth fund, which was acquired by Henderson in April when the group took over New Star.

It is believed the European Special Situations fund will be a smaller, nimbler version of Mr Pease's existing fund.

The new fund, believed to be structured as an open-ended investment company, will invest in companies with strong fundamentals that Mr Pease believes have been oversold because of extreme market conditions.

It is likely to be more opportunistic than the European Growth fund, with a slightly greater turnover of stocks.

Potential investee companies are likely to be cash rich and able to maintain consistent income streams in spite of the current economic downturn.

According to a source close to the company typical of the kind of company Mr Pease might invest in is Schindler, a Swiss escalator and lift manufacturer, and one of the biggest holdings in the European Growth fund.

A large proportion of its earnings comes from servicing contracts for equipment the company has already installed, protecting it from the cutback in new property developments.

A Henderson spokesman said the planned launch showed Mr Pease was confident the European market was currently offering good valuations.

The European Growth fund achieved a second-quartile return for the three years to 25 May this year, losing 1.55 per cent compared with a sector average loss of 7.18 per cent and ranking 22 out of 87 funds on a bid-to-bid, net income reinvested basis, according to Morningstar.

Since joining Henderson, Mr Pease has invested around £500,000 in the European Growth fund and a similar amount in the £199.4m New Star High Yield Bond fund, managed by James Gledhill.

Justine Fearns, investments research manager for national IFA AWD Chase de Vere, said: "Henderson have not had a strong UK retail presence in the last few years. By launching this fund they are showing their commitment not only to Richard Pease but also to the UK retail market.

"It may be a bit early to launch this kind of fund, but on the other hand there are investors who are sitting on cash and seeing a lot of opportunities out there.

"A plus-point will be the new fund's flexibility and its relatively small size. The fund would be suitable for an investor who is prepared to accept a bit of volatility but who is optimistic about the next five years."