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 September 2026
Market review and bond markets
Equity markets fell marginally in September, with expectations for further interest rate rises a driver behind the weakness in bond markets. The Federal Open Market Committee unanimously raised US interest rates by 25 basis points. It also published economic projections that pointed to a tougher stance on inflation, with Federal Reserve Chair Kevin Warsh stressing the need to remove some of the support low interest rates give the economy. The European Central Bank, the Bank of Japan, Norges Bank, and the Reserve Bank of Australia also raised rates.
US Treasury Secretary Scott Bessent defended his intervention in currency and US government bond markets, telling investors: “I have asymmetric information. I am the house now. You can bet against me if you want.” His intervention has had little effect, and arguably the opposite, with US government bond yields continuing to rise despite increasingly buying back its own bonds. Against that background, the sector fell 3.1%, dragged down by the weak performance of US financials. The Trust’s net asset value1 fell 2.2% during the month, outperforming its benchmark, the MSCI All Country World Financials Index, which fell 3.1%.
European financials conference
The conference season provided an excellent opportunity to catch up with the management teams of many European financial companies across the sector. We received a reassuring update on the operating outlook for European banks, with management teams pointing to continued loan growth, resilient net interest margins2 and stable asset quality3. Banks in Southern Europe are still seeing a greater benefit from the recent interest rate increases feeding through to revenue and therefore earnings.
We have slightly changed our mix of European banks by increasing our exposure to ING Groep (ING), the Netherlands' largest bank. ING is more sensitive to longer-term interest rates, whereas the periphery is more sensitive to short-term rates. Not unlike the UK banks, ING is benefiting from its 'replicating portfolio', where redeeming securities are reinvested into new government bonds at longer maturities, providing a medium-term tailwind for earnings. We also expect recent moves higher in bond yields to be positive for earnings, although we expect the benefit will feed through more slowly than for banks in Southern Europe, where we retain holdings across Italy, Spain and Greece.
US financials
While European financials rose over the month, US financials were particularly weak, led by US banks. As we highlighted in a previous commentary, Q2 earnings for US banks were much better than expected, due largely to strong trading revenues from their investment banking operations. However, in an update at another conference during the month, Bank of America expects to see weaker trading revenues in its investment bank for Q3, which prompted the sector to sell off. This was despite other banks, such as JP Morgan and Citigroup, forecasting continued growth and the industry seeing a pick-up in initial public offering (IPO) activity, which has been a weak spot in recent years.
The release of the Muse personal agent by Meta Platforms (owner of Facebook) in September also led to a selloff similar to, but smaller than, the one seen in February, when a dystopian blog about the disruption from artificial intelligence (AI) triggered a sharp fall in the share prices of companies seen as vulnerable. Unsurprisingly, many of these had seen a full or partial recovery in the intervening months. To paraphrase Donald Rumsfeld, former US Secretary of State for Defence, the known unknown is the willingness of consumers to use such agents. Direct-to-consumer models that offer lower-cost services have struggled to get traction in some markets, while the risks of giving data to a third party and the potential regulatory response lead to divergent views. For now, compared to the benchmark, we remain underweight the companies we see most at risk.
Asia-Pacific
Along with European banks, we remain overweight South Korean and Japanese banks, the latter continuing to perform extremely well. Interest rate expectations still assume higher policy rates by the end of 2027, led by both countries. Japanese banks are very sensitive to rising interest rates and, with loan growth picking up and the AI capital expenditure cycle little affected by higher rates, we see the backdrop for banks as supportive. South Korean banks combine margin expansion with resilient asset quality, low valuations and attractive total returns, supported by the Value-Up Program encouraging higher shareholder returns.
We also hold positions in Taiwan, where the technology boom is supporting growth and banks earn more from their currency trading with the US dollar as the interest rate differential widens, and in Singapore, where banks gain from both higher interest rates and growth in wealth management revenues. India is more complicated given the impact of higher oil prices and we remain underweight. That said, a short interest rate hiking cycle by the Reserve Bank of India and an easing in energy market dislocation would present opportunities in a market where valuations have lowered and the longer-term growth outlook is appealing.
Outlook
The sector has lagged wider equity markets over the past two months and year to date. While it is not alone in doing so, with the technology sector significantly outperforming over this period, the fundamentals are solid so we remain very positive. Consequently, profit forecasts are still positive. If AI continues to power growth, we see the sector remaining a beneficiary of that, with a more attractive interest rate background allowing margins and loan growth to generate higher revenues.
Furthermore, higher equity markets support healthy investment banking revenues and increased fees from wealth management and asset management businesses. Finally, strong corporate cashflows and a resilient consumer are not leading to any pick-up in bad debts, while what is so far a benign hurricane season which we think points to another year of strong profits for the insurance sector.
1 The total value of all the investments and cash held less any borrowings divided by the number of shares.
2The gap between what banks earn on loans and pay on deposits
3How likely loans are to be repaid
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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