Polar Capital Global Financials (PCFT)

Polar Capital Financials Trust (LON:PCFT) is the flagship vehicle from Polar’s specialist financials’ team. It aims to offer broad global financials exposure, including banks, insurance, asset management, exchanges and other diversified financials. The trust is run by three co-managers, namely John Yakas, Nick Brind and George Barrow, who use their experience and expertise to look for quality financials companies from across the globe, including emerging markets (see Portfolio). John Yakas recently announced his retirement from the team in June 2023. It is the sole trust in the AIC Financials sector, making it the only option for investment trust investors to access the asset class.

The portfolio will predominantly consist of equities, though the managers can allocate up to 10% in fixed income. This will help achieve the income goals of the trust, where the managers look to grow the Dividend each year. During the pandemic, many banks suspended their dividends, meaning the trust had to maintain its dividend with the help of revenue reserves. The managers have made some portfolio changes, which they believe should further support income generation and allow the board to, potentially, permit a return to dividend growth soon.

The managers believe the fundamental outlook for the sector has improved as a result of a change in the interest rate environment. This has been a headwind for much of the previous decade but has shown signs of a turnaround in the past couple of years (see Performance). The managers believe the sector has a considerable amount of ground to make up, though. Whilst the trust hasn’t historically produced alpha over its benchmark, it does offer broad exposure to the asset class, which has the opportunity to be enhanced with Gearing, with the goal of improving returns over the long term.