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 31 October 2025
Market review
Global equity markets performed well again in October, led by the continued strong performance of the technology sector as demonstrated by NVIDIA becoming the first company to achieve a >$5trn market cap. Q3 reporting has been favourable, with corporate earnings showing continued resilience.
As expected, the Federal Reserve lowered interest rates by 25bps and the market is expecting more rate cuts to follow soon. Japan elected its first female prime minister and she is expected to be positive for markets. The Trust’s NAV rose 1.0% during October, broadly in line with the MSCI ACWI Financials Index which rose 1.1%.
Credit where credit is due
US and European banks reported another strong set of quarterly earnings. In the US, banks’ results were supported by strong trading gains and growth in investment banking fees as M&A activity increased. In Europe, banks continued to beat and raise consensus expectations helped by better revenues and cost control. Even in markets like the UK, where the issue of motor finance provisions re-emerged, underlying results were strong.
During October we saw the collapse of Tricolor and First Brands in the US, which raised concerns over credit losses. Despite JP Morgan CEO Jamie Dimon’s observation around these losses being like “cockroaches”, they ultimately appear to have been idiosyncratic and concentrated in the automotive sector, driven by company-specific fraudulent activity. At a recent Financial Times Private Capital Summit in London, the Blackstone CEO rejected “100 per cent” the “idea that this was a canary in the coalmine”.
Also, commentary on conference calls about the strength of the consumer has been positive, such as this comment from JP Morgan’s CFO: “The current facts on the consumer side [are] resilient, spending is strong and delinquency trends are coming in below expectations. So, these are the facts that we really can’t escape”.
We are monitoring lending to non-deposit financial institutions, which has impacted some regional banks, and have shifted our exposure to options. We are overweight the large US banks and European banks, which have continued to perform well.
The market is worried for reinsurers because the wind did not blow
The Atlantic hurricane season was particularly benign which has led US/European reinsurance companies to report strong Q3 earnings. However, in this case good news is viewed by the market as bad news because strong profitability raises the likelihood of greater pricing competition which puts pressure on earnings over time. The market punished any insurer reporting disappointing growth and showing signs of pricing pressure, even if the absolute level of returns remained healthy.
This year we have significantly reduced our exposure to commercial reinsurers, particularly in the US. Our insurance holdings are now focused on company-specific turnarounds among US life insurers and improving growth momentum among Asian equivalents.
Deals are back on the menu
There has been a meaningful increase in M&A activity in the global financials sector during 2025. In October alone we saw a number of transactions announced. In the US banking sector, Fifth Third Bank* acquired Comerica Bank* for $11bn, paying 1.7x tangible book; Huntington Bank* acquired Cadence Bank for $7bn, also paying 1.7x tangible book.
In the insurance sector, Onex* and AIG* announced the acquisition of Convex* for $7bn, paying around 1.9x tangible book; Starr Insurance* acquired IQUW* for $1.5bn, paying around 1.5x book. We see this as a sign of confidence in the sector in terms of growth potential, balance sheet strength and regulatory stability. It also suggests that industry participants share our conviction that the sector offers compelling value.
Plenty of reasons to diversify
At a time when markets are increasingly concentrated, we think Financials offer a great way to diversify client portfolios. Consider that in the S&P 500 the top 10 stocks now represent over 40% of total market cap. Also, in the October Bank of America Fund Manager Survey, one third of respondents cited the AI-related equity bubble to be the biggest tail risk in markets. We are not saying we agree with the risk of an AI equity bubble, but we are saying that this concentration warrants diversification into sectors such as Financials where fundamentals are strong and valuations attractive.
Outlook
Recent earnings support our constructive outlook for the sector. A backdrop of more normalised interest rates, steeper yield curves (in part, a reflection of large public deficits and populist policies) and an easing in regulation (as governments shift to a more pro-growth stance) provides a supportive backdrop for the sector. While this shift in environment has supported the sector’s relative performance – it has outperformed over one, three and five years – valuations remain attractive, particularly in relation to the broader market.
*not held
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 as a financials fund manager and is the analyst responsible for the global insurance sector.
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