Cavendish UK balanced income aims for income and growth by investing in equities and fixed-interest securities, but can invest in other assets such as cash, near cash and derivatives if deemed appropriate. The fund sits in theUK Equity and Bond Income sector, so will target a return of 120 per cent of the yield of the FTSE All-Share Index. Cavendish chief executive Julian Lewis, who heads up the Cavendish worldwide fund, will be the lead fund manager.
Cavendish UK Select aims for growth and sits in the UK All Companies sector, focusing on FTSE 350 stocks. It will aim to provide lower risk returns by investing in medium and big companies that pay dividends, but it can also invest in other assets including government securities, cash, near cash and derivatives.
The fund will be headed up by the firm’s senior investment director Paul Mumford, a UK equities specialist with 30 years investment experience in stockbroking and fund management. He runs the firm’s flagship UK fund, Cavendish opportunities.
Mumford says many good quality stocks have been dragged down by concerns about government debt and worries about the Eurozone have created opportunities to buy good quality stocks at attractive prices. Companies with good income prospects are also on Mumford’s radar, as he expects dividends to return to the market this year after the 15 per cent fall in dividends during 2009.
Cavendish anticipates interest in the funds from investors who are recovering from the uncertainty of the recession, who want UK equity exposure without too much risk. The UK balanced income fund’s flexibility to invest in equities and bonds may have appeal for investors in the current climate of uncertainty, but the fund manager would need to make the right asset allocation decisions at the right time.
The UK select fund’s focus on FTSE 350 companies enables the fund to hold stocks that benefit from overseas earnings. However, it will miss out on higher growth, higher risk opportunities in smaller UK companies.