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 29 August 2025
Market review
Equity markets saw further gains in August supported by Fed Chair Jerome Powell’s comments at Jackson Hole that suggested an interest rate cut in September was warranted due to rising risks in the US jobs market, notwithstanding concerns around inflation. This was in contrast to the UK, where the positive impact of a cut in interest rates by the Bank of England was offset by the slim majority of members of the monetary policy committee who remain concerned about inflationary data which has been exacerbated by government tax and minimum wage changes.
Against that background financials outperformed wider equity markets, with the Trust’s net asset value rising 0.6% against its benchmark, the MSCI All Country World Financials Index, which returned 1.0%. This underperformance was largely due to the Trust’s underweight position in Japan and holdings in Beazley and Fidelity National Information dragging on performance.
Nu Holdings and Bank of Cyprus
Nu Holdings (Nu) and Bank of Cyprus were two of the strongest contributors to performance over the month. Nu is the number one Latin American FinTech company with significant market share in Brazil and now growing in Mexico and Colombia. Its share price rose 21.7% over the month on the back of results that illustrated continued strong growth in its business with customer numbers increasing to 123 million, up more than four million on the quarter; net income was up 11% versus the previous quarter and 42% over the year on a constant currency basis. Cost of servicing a customer remained steady at only $0.80 per month. The only negative was a small uptick in bad debts, which management put down to seasonality.
Bank of Cyprus, the largest bank in Cyprus, produced a solid set of results although profits only rose 2% on the previous quarter, reflecting the impact of lower interest rates on its net interest income. Nevertheless, the bank still produced a return on tangible equity of over 18.0% on a Common Equity Tier 1 (CET1) ratio of 20.6%, well above European banking peers and the key driver of the continued rerating of its shares, which rose 14% over the month. The Cypriot economy continues to perform well, with the country upgraded to A- by S&P Global in December 2024, reflecting its strong growth and debt-to-GDP ratio being on a par with Germany, a significant improvement on the CCC rating it was cut to during its financial crisis in 2012-13.
Beazley and Fidelity National Information
Beazley’s shares fell on the back of a more cautious outlook for growth which overshadowed a good set of earnings with a return on equity of 18% and a very strong solvency ratio. Its shares have performed very strongly over the past five years, raising equity capital to lean into the hard market in property and catastrophe reinsurance as well as cyber, where it has a market-leading position. With the market outlook for interest rates looking softer, we expect Beazley’s underwriting strength will continue to deliver attractive returns when looking at the diversification of its franchise and are reassured by the company’s discipline to slow growth when the risk/reward is less attractive. We remain very comfortable with the holding.
Fidelity National Information, a banking software and payments company, also saw its shares fall sharply on its results which were marginally better than expected and management increased guidance for the full year, the latter due to FX moves and recent acquisitions as opposed to stronger growth. The company also stated that third-quarter revenues could be weaker before rebounding. Furthermore, free cashflow generation was very weak. While management fairly pointed out that this was seasonal and the second half would be much stronger, the market was less forgiving and not willing to give the company the benefit of the doubt. We feel the shares remain undervalued relative to the cash generation capacity of the company, but reduced the holding as this was the second miscommunication by management.
UK banks
August saw the UK’s Supreme Court issue its much anticipated judgement on the Motor Finance appeals brought by Close Brothers Group and MotoNovo (owned by FirstRand Bank), following last October’s far-reaching Court of Appeal ruling in favour of consumers. Crucially, the Supreme Court ruled in favour of the banks on two of the three consumer claims, specifically those of fiduciary duty and bribery. The ruling held that car dealers, and by proxy the banks, do not owe a fiduciary duty (i.e. undivided loyalty) to customers when arranging finance and so commission payments do not constitute a bribe.
The one claim to be upheld in favour of consumers, however, related to an ‘unfair’ relationship between customer and lender, under section 140A of the Consumer Credit Act. This was driven principally by the size of the commission charged (55% of total interest) and a lack of clear and adequate disclosure about its existence. As a result, the Court deemed compensation to be necessary for such occurrences, with the FCA subsequently announcing its intention to launch a consultation by early October 2025 on an appropriate redress scheme. Against that background, UK banks rallied sharply on the news in the expectation that total compensation under the scheme would be substantially lower than previously expected, albeit there was selling pressure towards the end of the month as speculation resurfaced of further taxes on the sector.
Outlook
With the rally in financial markets, we have modestly reduced risk in anticipation that markets will be less forgiving in September and October and will provide an opportunity to take on more risk in the portfolio at lower levels. Nevertheless, we remain constructive on European banks, including the UK, our largest overweight position. In a note during the month, Morgan Stanley highlighted that the sector saw the largest increase of positive versus negative adjectives in its second-quarter results which will have helped share price performance, notwithstanding that it was most likely in part due to the about turn on tariffs which would have dominated first-quarter earnings calls. Despite their strong performance, they remain on a large discount to wider equity markets and other major banking markets with a price/earnings ratio on average of 9.1x for calendar year 2026. In comparison, the equivalent price earnings ratios for Australian, Indian, US and Japanese banks are 19.9x, 14.3x, 12.9x and 11.6x respectively. Only Chinese and Korean banks trade on lower multiples.
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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