Polar Capital looking strong as active managers struggle
AUM up 5% in the last quarter of 2024, performance fees jump
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My latest Equity Development research note covering Polar Capital’s 13 Jan 25 AUM update is out.
Video Summary
Executive Summary
Polar’s AUM grew £1.1bn or 4.9% over Q3 of FY25 (Oct 24 - Dec 24) to £23.8bn. This was on the back of a strong investment performance, contributing +£1.47bn despite a Dec 24 market pullback, and modest outflows of £0.26bn, mostly in Oct 24 when equity funds saw widespread outflows ahead of the UK budget.
Investment performance translated to 6.3% return over Q3, impressive considering that the returns of benchmark indexes relevant to Polar’s largest strategies were much lower than that: Dow Jones Global Technology: +5% (tech. strategies 42% of AUM); MSCI World Health Care: -11% (17% of AUM); MSCI Emerging Markets: -8% (13% of AUM); MSCI World Insurance: -3% (11% of AUM).
Calendar-2024 was a period which saw UK-listed active managers experience widespread and often heavy outflows. But Polar stands out as a leader in attracting and retaining assets, with positive net flows in two quarters and over the full-year. [While Q4 data is not yet available for most managers, from those that have reported and from Calastone’s fund flow index, initial indications are that it was a period characterised by outflows for UK active managers].
Performance fee profits (net of staff allocations) jumped from the previous marked-to-market £0.7m, to £8.3m. As most PF’s crystallise at the end of December, this increase is now secured and not merely a mark-to-market estimate.
Given it’s relative outperformance, it also seems strange that Polar’s PER of 11.1 is only just above sector median.
Full research note available here.
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Disclosure: At the time of writing, Paul Bryant was a shareholder of Polar Capital and covered Polar Capital as an analyst on behalf of Equity Development Limited. Read Equity Development’s research on Polar here. And please read this link for the terms and conditions of reading Equity Development’s research.