Global Asset Management (GAM) has launched a specialist European hedge fund which aims to achieve capital appreciation through investing long and short in small- and mid-cap European equities.
The GAM EuroSelect Hedge Fund is managed by John Bennett, head of GAM's European team, who will seek out investment opportunities among companies with a market capitalisation of up to E3bn.
The fund will have a concentrated portfolio with no more than 50 long and 50 short positions.
'In European markets as a whole, expectations for earnings remain too high,' said Bennett.
'I believe this year will see some fairly fundamental policy changes, in particular as the need to reflate grows by the day. At the smaller-cap end of the market, we are seeing increased corporate activity and I have no doubt there is more to come. Within this environment we see a wealth of small- and mid-cap opportunities.'
The investment strategy will be driven by a bottom-up, research-intensive approach. On the long portfolio, GAM will seek to identify sector themes as well as stocks which are overlooked and under researched.
This, according to Bennett, is helped by the enormous increase in near-passive investing in recent years. On the short portfolio, the fund manager will seek out overvalued situations, as well as failing business models.
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