Investment trust insider on Polar Capital Global Financials – James Carthew: here’s a good yield while banks recover
Thanks to dividend cuts, fears of soaring bad debts and, for a couple of them, political strife in Hong Kong, UK-listed banks have been poor performers in 2020. Globally, the MSCI Banks index has tumbled 26% in sterling terms so far this year (up to close of business on 29 July).
However, for UK investors the picture is gloomier – even before today’s fall on first half results, HSBC (HSBA) had dropped 39%, while Standard Chartered (STAN), Barclays (BARC) 42%, NatWest (NWG), the former Royal Bank of Scotland, and Lloyds (LLOY) have plunged between 41% and 55%.
Thankfully, there is an alternative in the form of Polar Capital Global Financials (PCFT). Broadening the opportunity set to embrace banks in faster-growing countries, jurisdictions that did not mandate dividend suspensions, banks building new businesses in emerging markets and banks that are just better run, is paying off for the investment trust.
Ironically, the biggest problem fund managers Nick Brind and John Yakas face when recruiting new investors is overcoming the cynicism about financials that the UK banks have inspired.
The trust was launched with a seven-year life in 2013 but earlier this year, in the depths of the crisis, I was pleased to see shareholders vote to extend the life of the company indefinitely. The company offered a 100% exit opportunity at this point, but a sizeable majority of investors stuck by the trust. It still has a market value of £130m today.
Relatively, PCFT is a good news story. Not only… read more here