Polar Capital Global Financials Trust plc (the "Company"): The Company is an investment company with investment trust status and its shares are excluded from the Financial Conduct Authority’s (“FCA”) restrictions on the promotion of non-mainstream investment products. The Company conducts its affairs, and intends to continue to conduct its affairs, so that the exemption will apply.
The Company is an Alternative Investment Fund under the EU's Alternative Investment Fund Managers Directive 2011/61/EU as it forms part of UK law by virtue of the European Union (Withdrawal) Act 2018.
The Investment Manager: Polar Capital LLP is the investment manager of the Company (the "Investment Manager"). The Investment Manager is authorised and regulated by the FCA and is a registered investment adviser with the United States' Securities and Exchange Commission.
Key Risks
- Investors' capital is at risk and there is no guarantee the Company will achieve its objective.
- Past performance is not a reliable guide to future performance.
- The value of investments may go down as well as up.
- Investors might get back less than they originally invested.
- The value of an investment’s assets may be affected by a variety of uncertainties such as (but not limited to): (i) international political developments; (ii) market sentiment; and (iii) economic conditions.
- The shares of the Company may trade at a discount or a premium to Net Asset Value.
- The Company may use derivatives which carry the risk of reduced liquidity, substantial loss and increased volatility in adverse market conditions.
- The Company invests in assets denominated in currencies other than the Company's base currency and changes in exchange rates may have a negative impact on the value of the Company's investments.
- The Company invests in a concentrated number of companies based in one sector. This focused strategy can lead to significant losses. The Company may be less diversified than other investment companies.
- The Company may invest in emerging markets where there is a greater risk of volatility than developed economies, for example due to political and economic uncertainties and restrictions on foreign investment. Emerging markets are typically less liquid than developed economies which may result in large price movements to the Company.
Important Information
Not an offer to buy or sell: This document is not an offer to buy or sell or a solicitation of an offer to buy or sell any security, and under no circumstances is it to be construed as a prospectus or an advertisement. This document does not constitute, and may not be used for the purposes of, an offer of the securities of, or any interests in, the Company by any person in any jurisdiction in which such offer or invitation is not authorised.
Information subject to change: Any opinions expressed in this document may change.
Not Investment Advice: This document does not contain information material to the investment objectives or financial needs of the recipient. This document is not advice on legal, taxation or investment matters. Prospective investors must rely on their own examination of the consequences of an investment in the Company. Investors are advised to consult their own professional advisors concerning the investment.
No reliance: No reliance should be placed upon the contents of this document by any person for any purposes whatsoever. None of the Company, the Investment Manager or any of their respective affiliates accepts any responsibility for providing any investor with access to additional information, for revising or for correcting any inaccuracy in this document.
Performance and Holdings: All data is as at the document date unless indicated otherwise. Company holdings and performance are likely to have changed since the report date. Company information is provided by the Investment Manager.
Benchmark:The Company is actively managed and uses the MSCI ACWI Financials Net TR Index as a performance target and to calculate the performance fee. The benchmark has been chosen as it is generally considered to be representative of the investment universe in which the Company invests. The performance of the Company is likely to differ from the performance of the benchmark as the holdings, weightings and asset allocation will be different. Investors should carefully consider these differences when making comparisons. Further information about the benchmark can be found www.mscibarra.com.
Third-party Data: Some information contained in this document has been obtained from third party sources and has not been independently verified. Neither the Company nor any other party involved in compiling, computing or creating the data makes any warranties or representations with respect to such data, and all such parties expressly disclaim all warranties of originality, accuracy, completeness, merchantability or fitness for a particular purpose with respect to any data contained within this document.
Country Specific Disclaimers
United States: The information contained within this document does not constitute or form a part of any offer to sell or issue, or the solicitation of any offer to purchase, subscribe for or otherwise acquire, any securities in the United States or in any jurisdiction in which such an offer or solicitation would be unlawful. The Company has not been and will not be registered under the United States Investment Company Act of 1940, as amended (the “Investment Company Act”) and, as such, the holders of its shares will not be entitled to the benefits of the Investment Company Act. In addition, the offer and sale of the Securities have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”). No Securities may be offered or sold or otherwise transacted within the United States or to, or for the account or benefit of U.S. Persons (as defined in Regulation S of the Securities Act). In connection with the transaction referred to in this document the shares of the Company will be offered and sold only outside the United States to, and for the account or benefit of non-U.S. Persons in “offshore- transactions” within the meaning of, and in reliance on the exemption from registration provided by Regulation S under the Securities Act. No money, securities or other consideration is being solicited and, if sent in response to the information contained in this document, will not be accepted. Any failure to comply with the above restrictions may constitute a violation of such securities laws.
Further Information about the Company: Investment in the Company is an investment in the shares of the Company and not in the underlying investments of the Company. Further information about the Company and any risks can be found in the Company’s Key Information Document, the Annual Report and Financial Statements and the Investor Disclosure Document which are available on the Company's website, found at: https://www.polarcapitalglobalfinancialstrust.com
Fund Manager Commentary As at 30 April 2025
Market review
By the end of April, equity markets had staged a notable recovery from their initial negative reaction to the announcement of new trade tariffs by President Trump earlier in the month. Global equities, as per the MSCI All Country World Net Total Return Index ended the month up 0.9%, in US dollar terms, although the index declined 2.5% in sterling terms, reflecting continued dollar weakness.
We believe the rebound reflects the market’s reassessment of the tariff announcements, which were subsequently watered down through delays and exemptions. While uncertainty remains around the broader economic impact and potential implications for consumer health, the continuation of negotiations suggests a more pragmatic approach is prevailing. As a result, fears of a worst-case scenario appear to have receded.
It is particularly noteworthy that global financials outperformed the broader market during this volatile period. The sector is up 0.4% year-to-date, in sterling terms, compared to a 6.7% decline for global equities.
The Trust’s net asset value fell 1.8% in April compared to a 2.4% decline by the benchmark, the MSCI All Country World Financials Net Total Return Index. The positive relative performance was supported by the Trust’s overweight position in trading platforms, European banks and certain emerging markets, primarily Latin America. This was partially offset by weakness in Japanese banks, US life insurance and the underweight position in Australia.
Portfolio activity: responding to Tariff-related volatility
During the month, we repositioned the Trust to reflect near-term risks associated with the new US tariffs.
We reduced exposure to US financials and took steps to de-risk our regional allocation. Specifically, we trimmed holdings in US banks, including Citigroup, to reflect a potentially tougher macroeconomic backdrop and the risk of rising loan losses, albeit from currently benign levels. We also cut exposure to consumer finance companies, including American Express, given the likelihood that corporates will pass higher input costs onto consumers.
We further reduced our exposure to capital markets-sensitive names, such as alternative asset managers and Goldman Sachs Group, due to a slower-than-expected recovery in IPO markets, which had been anticipated for 2025.
We reinvested this capital into more defensive holdings in the US (Berkshire Hathaway) and increased our weighting in quality Canadian banks (Royal Bank of Canada) in which we have been underweight.
In Europe, we have been overweight in several trading platforms as we believe they will be beneficiaries of consumers taking greater control of their investments. In April, we added to these holdings (Plus500; IG Group Holdings) as they are direct beneficiaries of elevated trading activity that we feel will likely follow the recent volatility.
Having been overweight European banks, we had slightly reduced our holdings ahead of Liberation Day and purchased put options to protect the portfolio from potential weakness in the sector.
We also used the market volatility to initiate positions in long-term structural winners. Notably, we added London Stock Exchange Group (LSEG), a leading global data provider and owner of the London Stock Exchange, and FinecoBank, an Italian platform gaining market share through its low-cost offering.
We had been significantly underweight emerging market financials for some time due to a tight liquidity environment and slowing growth. With liquidity conditions easing in several markets and domestically driven economies such as India being relatively insulated from tariff threats, we have added to some high-quality emerging market financials.
For example, we bought a new position in HDFC Bank, a leading Indian bank that stands to benefit from the regulatory easing of liquidity conditions. We also bought a new position in Nu Holdings, a rapidly growing lender across Latin America.
While the long-term implications of the tariff regime remain unclear, we remain ready to reposition the portfolio as needed. We are encouraged that the Trust has navigated the recent volatility well, underscoring the benefits of our more active and balanced approach.
Q1 2025 reporting highlights
As Q1 earnings season concludes, it is encouraging to see most of our portfolio holdings delivering solid performance to start the year.
Outlook
We see the recent volatility from the US tariff announcements as a constructive entry point for financials. Q1 results have reaffirmed our conviction in the sector’s attractive returns and resilience. We believe market sentiment remains overly cautious, influenced by outdated ‘muscle memory’ from past cycles. Given consensual underweight positioning by investors and attractive valuations, we believe it would take a severely negative macroeconomic scenario to end the sector’s relative outperformance in recent years.
In our view, several factors support a positive outlook:
We remain confident in our positioning and believe the Trust is well placed to navigate further uncertainty while capturing opportunities in high-quality, attractively valued financials globally.
Nick Brind
Nick’s experience comes from running specialist and generalist funds with UK and global mandates for the past 25+ years
George Barrow
George is a specialist financials fund manager as well as an analyst across Europe, Asia and emerging markets
Tom Dorner
Tom joined Polar Capital in 2023 and is the analyst responsible for the global insurance sector
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