James Carthew: Rate fears help case for Polar Capital Global Financials
While there have been no front-page headlines for a few weeks, there still seems to be an undercurrent of concern about the health of the banking sector. The main problem is perceived to be exposure to the commercial property sector, where falling property values could trigger defaults.
However, not all banks are created equal and there is much more to the financial sector than just banks. The managers of Polar Capital Global Financials (PCFT) seem reasonably sanguine about the prospects for that trust’s portfolio.
PCFT has given back some of its outperformance of its MSCI All Countries World Financial index benchmark recently, but over the longer term has still done a good job. Three years ago in April 2020, in the throes of the Covid-related panic that had overwhelmed markets, PCFT ran a serious risk of disappearing.
That market upset happened to coincide with a 100% tender opportunity provided around the seventh anniversary of its launch. As at end May 2023, the investors that hung on and agreed to back the trust to continue have since been rewarded with a 59.3% total underlying investment return, whereas an ETF matching the benchmark index would have returned 53.1%.
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