UK- Hermes, the independent investment manager, is launching a new active European smaller companies fund. The fund is being seeded by British Telecom pension scheme with more than £170m, and is in addition to the £2.4bn existing European equity funds managed by Hermes.

Director of European equities Greg Allen will head the fund. "In the last two years, European small caps have been performing at least as well as European large caps. In fact we expect the small caps to outperform the large caps in the near future and this is why we have decided to raise our exposure to this asset class as a single fund," he says.

Hermes has appointed two people to oversee the fund. Sylvia Solomon will join as investment manager and Tracy Collins as senior investment analyst. Both were previously at Baring Asset Management.

Solomon has held several positions in ING Baring AM and in the last four years managed European Assets. Collins has been with ING Barings her entire career and was last year promoted to investment manager of European assets.

Both Solomon and Collins will report to Greg Allen.