* To be renamed Lansdowne Developed Markets fund
* Fund has already held half its assets outside UK
* Can now hold up to 10 pct in emerging markets
* Lost around 20 pct last year, up 7 pct this year
LONDON, Feb 21 (Reuters) - Lansdowne Partners, one of Europe's biggest hedge fund firms, is to rename its flagship $7.5 billion UK Equity fund, reflecting its overseas investments and allowing it to invest in emerging markets, a source close to the firm told Reuters.
The fund, run by Stuart Roden and Peter Davies, will be renamed the Lansdowne Developed Markets fund in April.
The portfolio has already been investing about half its assets outside the UK, including taking large stakes in U.S banks, and will now be able to put up to 10 percent in emerging markets, although there are no immediate plans to do this.
Lansdowne, headed by Paul Ruddock, manages around $12.5 billion in assets and is well known for making millions shorting Northern Rock during the financial crisis prior to the stricken bank's collapse.
More recently it has been betting on a recovery in some bank stocks, including Lloyds, although last year it sold its $850 million stake in Goldman Sachs.
"Lansdowne are changing the name of the fund, having secured approval from the investors, in order to more accurately reflect the investment strategy. The fund has had approximately half of its investments outside of the UK for a number of years," said a source close to Lansdowne.
"The fund is wholly invested in developed markets. The offering memorandum allows the fund to have up to 10 percent in emerging markets, although there are no plans to have any exposure to emerging markets anytime in the near future."
Lansdowne UK Equity lost around 20 percent in performance terms in 2011 in what proved a difficult year for the industry after a number of its high-conviction bets failed to pay off.
However, it is up 7 percent so far this year, boosted by a rally across stocks markets after the European Central Bank's long-term refinancing operations flooded markets with 489 billion euros ($649 billion) of cheap cash in December.
"They've stayed invested and have stuck with the high-conviction names," said one investor who asked not to be named.
Lansdowne Partners declined to comment.