The fund is designed for investors who are looking for above average returns that smaller companies can provide. It will be managed by Cavendish senior fund manager Paul Mumford, who has managed the Cavendish Opportunities Fund since inception in 1988.
This fund invests in small caps and larger companies, wherever the opportunities are. Working alongside Mumford on the Aim fund will be fund manager Tim Roberts, who has more than 10 years experience of UK equities with a particular focus on smaller companies.
According to Cavendish, the Aim market which has just reached its tenth anniversary has grown rapidly, enabling managers to be fully invested in Aim while still having a diversified portfolio.
However, it notes that the market is a specialist one which can be difficult as there is not a lot of information available, the market can be illiquid and smaller companies carry greater risks than their larger counterparts. Cavendish believes its experience in selecting smaller companies will be useful in selecting the best stocks in the market.
The company also feels there will be ample opportunities for this fund, with more companies coming on to the Aim market over the next few months that will be trading at an attractive price.
When it was introduced in 1995, 121 companies were listed but now, in 2005, 1, 197 companies are listed. Smaller companies, even the more established ones, looking for a market listing may prefer Aim rather than the main market because the regulations are less stringent, listing costs are lower and Aim shares are treated as unquoted assets for tax purposes. These factors may also mean some companies move off the main market to list on Aim.
However, volatility can be a problem with this market and investors may be in for a bumpy ride.