The company says that launching a new fund does not mean it is calling the bottom of the market. Rather, the Asia Pacific fund reflects its views that optimism is returning to the market and that current low valuations relative to their historic peaks represent an attractive entry-point for medium-term investors.
For Cavendish, these factors mean that being out of equities now carries significant risk. It wants to provide investors with greater choice and diversification by expanding its range to cover the Asia Pacific region.
Cavendish says the Asian market is typically classified as emerging, but it points out that the region contains a number of big, well-established companies. It feels these are more interesting growth stories than would be found among equivalent companies of the same size in more developed western markets.
The new fund will invest mainly in big and medium sized companies with a market cap of over $500m. The company believes this strategy will provide greater stability, thereby reducing the risks of investing in less mature markets.
Asian markets have been affected by the global economic slowdown but growth is stronger than western markets and represents a good long-term opportunity. Cavendish is a specialist in undervalued stocks and recovery situations, so current market conditions may suit its investment strategy.
However, Asian markets could be susceptible to short-term setbacks within a long-term trend for growth.