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Cavendish Asset Management to merge seven funds

Merge-Mergers-700.jpgCavendish Asset Management is merging seven of its funds to streamline asset allocation and reduce costs.

The Cavendish North American, Asia-Pacific excluding Japan, Japan, Europe, Technology and UK Select funds are being merged into the TM Cavendish Worldwide fund, which Cavendish manages on behalf of fund provider Tutman.

The TM Cavendish Worldwide fund will subsequently be renamed the TM Cavendish International fund.

FCA approval has been granted and a shareholder vote will take place at an extraordinary general meeting on 1 September. Subject to approval, the mergers will take place on 15 September.

The managers of the six smaller funds will continue to work for Cavendish, assisting with the investment strategy, while the re-named International fund will continue to be managed by CIO Julian Lewis.

Cavendish says there are “a number of critical reasons” for the mergers, including the impracticalities of running smaller funds such as high operating costs and constraints on the size of investments the managers can make.

“This has a negative impact on transaction costs as well as our ability to gain sufficient meaningful economic exposure to the securities in which we invest,” the firm says.

Cavendish adds that the volatile investment environment that is being driven by global geo-political events is prompting clients to assess their tactical global asset allocation, but “transaction costs and the risk of crystallising capital gains make this expensive for clients”.

The mergers will enable the investment manager to reduce duplications as well as the number of securities held, which should reduce costs.

“On the whole we do not believe that maintaining regional or sector based investment strategies sufficiently allows us to meet our clients objective for relative capital growth over the longer term for their portfolios overall,” the firm says.

“In short, the ability to make regional or market specific asset allocation within a more focussed global strategy will allow us to better manage our clients’ investments.”

The £144.2m TM Cavendish Worldwide fund launched in 1994. Over five years it has returned 71 per cent compared to the 54 per cent average of the Flexible Investment sector, FE data shows. Once the mergers have taken place, the enlarged fund’s assets will be boosted to £676m.


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