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Thomas Howard, investment analyst at Knox D’Arcy, said although there were similar "insider trading" branded funds, there were none that used the same strategy in the US.

The trust will use data on director trades on UK indices to invest in a portfolio of 40-80 listed companies.

Mr Howard said: “There’s a lot of interest in it, and we haven’t found anyone in America that does it. Directors are better informed than the market. If they buy stocks in companies they run, these companies ought to outperform.”

Mr Howard said the trust would be sending out a circular to investors detailing its plans for the new fund and offering them the opportunity to take part in the new trust.

“The circular will explain the Directors Dealings strategy and the new investment strategy and give people the opportunity to have their shares back in cash."

Knox D'Arcy took over the underperforming Eaglet investment trust earlier this year after being approached by large shareholders.

The fund management company said, since taking over management of Eaglet, it had realised “just over half" of its assets at a premium to asset value.

Knox D’Arcy – which has analysed data going back to 1994 – will factor in a number of different aspects of the trades and the motivation behind the sale before making any decision on whether to invest.

The size of the fund has initially been set at approximately £50m. However, Mr Howard said, if there were sufficient interest, the fund could easily grow larger.

“The beauty of this strategy is that it is scaleable," he said. "There’s no reason why it shouldn’t be a £500m or £1bn fund."