GlobalAug 7 2017

Cavendish to cull fund range via mega-merger

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Cavendish to cull fund range via mega-merger
ByDave Baxter

Cavendish is looking to merge away the majority of its 10-strong fund range, as rising overheads force the asset manager to seek “greater cost efficiencies”.

The firm plans to merge six of its funds – Cavendish North American, Asia-Pacific, Japan, European, Technology and UK Select – into its £145m Worldwide offering. As part of the proposals, which go to a shareholder vote next month, Worldwide would be renamed as Cavendish International.

The managers of the six funds would stay with the firm, assisting with investment strategy, though chief investment officer Julian Lewis would remain as a named manager on Cavendish International.

“The overall operating costs of managing funds are increasing, making small funds relatively expensive and therefore less economic for investors. We are also constrained by the size of the investments we are able to make within smaller funds,” Cavendish explained.

The firm also noted a need for cost-efficient global asset allocation in an “increasingly volatile investment environment”.

“Clients, most of whom are invested in several of our funds, can only consider this type of tactical global asset allocation by switching between the separate funds,” the asset manager said. 

“Transaction costs arising from switching and the risk of crystallising capital gains make this expensive for clients.”

The funds Cavendish is seeking to merge away hold a total of £538m in assets. The company said it expected some outflows due to clients seeking to do their own asset allocation.

The firm's other three funds - UK Balanced Income, AIM and Opportunities - are unaffected by the plans.