Polar Capital reports solid full-year performance

The AIM-traded firm said that during the year, assets under management increased £1.2bn, which comprised net inflows of £0.4bn and an increase of £0.8bn from market movements and fund performance.

Chief executive officer Gavin Rochussen said despite the market backdrop, net flows were “resilient” with “notable success” in the net funding of segregated mandates amounting to £745m.

That took total segregated assets under management to £1.2bn, which now represented around 5% of total assets under management as at 31 March.

“Our diversification strategy is yielding results with net inflows in the quarter of £230m into our sustainable Emerging Markets Stars and sustainable Smart Energy and Smart Mobility strategies,” Gavin Rochussen said.

“This includes an early success in the funding of a segregated mandate for the sustainable Smart Energy strategy.

“Over the year there has been strong progress in increasing the exposure Polar has in strategies other than its core Technology funds.”

Rochussen said the rotation away from high-growth stocks and “pandemic winners” saw net outflows of £1.3bn from the Technology funds, though that was more than offset by net inflows of £873m into the Polar Capital Sustainable Emerging Market Stars strategy, £561m into the Healthcare strategy, £143m into the Convertible funds, £85m into the European Opportunities fund and £120m into the recently-launched sustainable Smart Energy and Smart Mobility strategy.

He added that a “healthy proportion” of those inflows were from regions and clients new to the business.

“With the onset of inflation and more hawkish central bank policy globally, rate rise expectations have caused higher growth equities to de-rate. This impacted our larger sector-focused strategies such as Technology and Healthcare in the short term.

“Shorter term fund performance across our fund range has consequently been challenging with 43% of our funds outperforming the benchmark over the calendar year to 31 March.

“Longer term performance remains strong with 84% of assets under management in our UCITS fund range ranked in the top two quartiles against peers in the Lipper universe over three years.”

Gavin Rochussen said tightening rates and the invasion of Ukraine led to investors reducing weightings to riskier growth asset classes during the last three months.

In the quarter, Polar had net outflows of £411m, of which £630m were from its Technology funds, offset by net inflows of £170m into its sustainable Emerging Market Stars funds, £70m into the Insurance fund, £86m of share issues by the Polar Capital Financials Trust, and £60m net inflows into the recently-launched sustainable Smart Energy and Smart Mobility funds.

“We recently announced that the Board of the two US mutual funds, Phaeacian Accent International Value Fund and the Phaeacian Global Value Fund, decided to close the funds with effect from 26 May,” Rochussen said.

“The closure of the funds is immaterial to the core profitability of the group and we continue to develop our US footprint.”

Gavin Rochussen said the pipeline for flows remained “strong” for both the firm’s Emerging Markets Stars range of funds, which had sustainability at their core, as well as for the two recently launched Article 9 funds - Polar Capital Smart Energy Fund, and the Polar Capital Smart Mobility Fund.

“We remain confident that, with our diverse range of complementary funds and focus on performance in our actively managed strategies, we are positioned to continue to perform well for our clients and will continue to generate net inflows.”

Polar Capital said it would announce its results for the financial year ended 31 March on 27 June.

At 1144 BST, shares in Polar Capital Holdings were down 2.13% at 597p.