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The fund is still at the planning and evaluation stage, but it is understood that it would be similar to the BlackRock fund in that it would seek to deliver a positive absolute return in all market conditions by employing wider Ucits III investment powers in a long/synthetic-short portfolio.

Steer, in addition to heading up the £488m UK Alpha and £500m Gemini Hedge funds, has recently been put in charge of former New Star manager Charles Tritton’s segment of the £101.6m Skandia Strategic Best Ideas fund following his departure from the company.

According to Morningstar, over the three years to 7 August, the UK Alpha fund returned 27.6 per cent against the IMA UK All Companies sector average of 12.4 per cent. The fund was ranked 23rd out of 274 funds over the same time period.

Meera Patel, senior fund analyst at Bristol-based IFA Hargreaves Lansdown, said: "It would be good if New Star launched the fund, as it would give BlackRock some competition. UK managers in general should be taking a leaf out of Tim Steer's book.

"The Gemini fund has performed exceptionally well, and he clearly has the experience to run such a product. We would welcome it from a manager of his calibre."

Activity in the absolute-alpha space has increased of late, with JPMorgan adding a hedged sterling share class to its €3bn (£2.3bn) Highbridge Statistical Market Neutral fund to compete with BlackRock, while Cazenove recently launched its UK Absolute Target fund.