Threadneedle, the £67bn (€100bn) asset manager, is to launch an absolute return fund that will be one of the first to take advantage of new European regulation concerning mutual funds.

Simon Davies, chief executive of Threadneedle, which has $2bn (€1.7bn) of hedge fund assets, said the company planned to launch the new fund next month. It will focus on bonds and will be managed by Quentin Fitzsimmons, head of the Threadneedle's government bond desk.