U.K.–based Montanaro Fund Managers today launched its first hedge fund, the Montanaro Absolute Return Fund, with EUR10 million (US$13.2 million) in assets. The Irish Stock Exchange-listed vehicle is an equity long/short fund that will invest in European small-cap companies and is aimed at retail investors.

Riitta Hujanen, fund manager, said the new offering employs bottom-up analysis of European small-cap stocks with a futures-based hedging overlay component, which is not focused on individual stocks but on European equity futures market indices.

Hujanen said she is bullish on European small-cap stocks. “We are seeing a lot of M&A activity in the U.K. and a lot of smaller companies are targets of bigger companies, which are so cash rich that they’re driven to buy their competitors,” she said. “We are always meeting with small-cap CEOs and they’re all so confident about their outlooks that it is difficult to be very negative as a fund manager.”

The fund charges fees of 1.5/20 with a EUR1,000 minimum investment requirement.
Montanaro Fund Managers, which was founded by Charles Montanaro in 1991, is currently managing some EUR800 million in total assets.