Thames River Capital is launching a Ucits-compliant European Real Estate Equities fund for the end of March.
The firm says the fund will be able to sell securities short when necessary.
Marcus Phayre-Mudge, co-manager of the Irish-domiciled fund with James Wilkinson, says it aims to beat the FTSE EPRA / NAREIT Developed Europe Capped index, in sterling terms in all market conditions.
The firm's nine-member property team already manages £729m in one hedge fund and three long-only products.
Wilkinson says: "Real estate is a long-term real asset that offers relatively high levels of income return. Rental yields in excess of 7% in Europe and the UK are significantly ahead of the yields from European government or investment grade corporate bonds."
The firm says the new fund's gross exposure will sit between 80% and 160% in normal market conditions. Its net exposure will be between 60% and 140%.
Phayre-Mudge says: "In taking short positions, we are hoping we will be able to give more capital protection if we need to."
The property derivatives market. which the fund can use, was boosted last week by news UK property company Land Securities plans to use it to hedge exposure to large developments.
Phayre-Mudge says the fund's coverage will benefit from the property team having members from Britain, France and Scandinavia - each key investment markets.
He adds rental growth is returning in London, but development of new floor space in the West End has been severely limited for three years. He says it is badly needed.
The main dangers for the asset class, he says, are public sector job cuts hitting specific areas - which Thames River will avoid - and a hung parliament.
The minimum investment in the fund is £10,000. Its annual management fee is 1.5%. The performance fee of 15% is payable on gains exceeding the benchmark.
