Rushton, who was co-manager of the Legal & General UK Absolute Return fund, will launch the Polar Capital UK Absolute Return fund by the end of September. He also previously managed the Legal & General UK Special Situations and UK Active Opportunities funds.
His exit in May prompted L&G to close its Absolute Return fund.
The new comes less than a year after Polar closed down its UK equity desk, fronted by Philip Hardy, which included a UK absolute return fund. The division held $293 million (£182.2 million) at the time of the announcement in October 2013.
Commenting on the appointment, Polar Capital chief executive Tim Woolley (pictured) said: 'We are delighted that Guy is joining us to head up this new initiative in the alternative funds arena and his appointment demonstrates our commitment to developing this side of our business further in the years ahead.
He added: 'Guy is one of the rising talents in the UK alternative space and we look forward to him developing a significant franchise for us over the coming years.'
Rushton's exit is the latest in a string of departures at L&G Investment Management. These include US equity head Nigel Holland and Dynamic Bond trust manager Dickie Hodges.