Fidelity International reckons there are overlooked growth opportunities among small US businesses and has launched a new fund to cash in.

The Fidelity Funds 2 - US Smaller Companies Fund focuses on US small cap stocks.

The firm hopes its fund managers can seek out stocks with superior growth potential and financial characteristics selling at modest prices.

The company said the fund aims to achieve capital growth over the long term, investing at least 70% of its assets in equities of small companies that are listed, headquartered, or do most of their business in the US.

Fidelity claims the US small cap universe is under-researched and offers opportunities to identify growth stories which are overlooked or under-appreciated by other investors.

The fund will target businesses with a local focus, which could benefit from the increased trade tensions. It hopes to capture gains when small caps perform well and use valuation discipline to mitigate losses during downturns.

The equity investment strategy is sub-managed by portfolio manager Forrest St Clair from Fidelity Investments, a separate US-based company. Mr St Clair is a portfolio manager within the global institutional solutions group at Fidelity Investments.

He co-manages the Fidelity Small Cap Discovery Strategy and the Fidelity Series Small Cap Discovery Strategy. He is also a member of the Fidelity Institutional Asset Management small cap team and manages the small company strategy, which he has done since 2009.

The fund is supported by Fidelity Investments’ research and analyst team, and is now available to clients of Fidelity International through a Luxembourg SICAV (UCITS) fund for the first time.

Fidelity International is the management company of the fund, while Fidelity Investments is the sub-manager responsible for the investment strategy and the research.

Dennis Pellerito, head of wholesale, UK, at Fidelity International, said: “The new fund provides a differentiated avenue to access the US market through a complementary approach to large cap investments, potentially enhancing risk-adjusted returns within client portfolios.”