In spite of a challenging first four months of the year, Polar Capital Global Financials (PCFT ) managers Nick Brind, George Barrow and Tom Dorner believe their sector remains well-positioned for growth.

During the five months between December 2024 and the end of April, the trust saw its net asset value (NAV) drop by 1.6%, slightly ahead of a 2% fall by the MSCI ACWI Financials index.

This appears to have been down to the £620m trust’s large allocation to US financials, accounting for 54.5% of assets. Fears of a looming recession hit the banking sector after US president Donald Trump announced punitive trade tariffs on 2 April. 

The managers describe the political permutations of this as ‘significant and unknowable in the short term’.

‘They range from hope that common sense will prevent further internal US and external economic harm and that a relatively quick conclusion to trade negotiations between the US and other countries will occur, to a sharper slowdown and recession as other countries respond with corporates and consumers cutting back materially on spending’, they said.

Regardless of the macro headwinds, the team believes financials are well-positioned for growth due to ‘a higher-for-longer interest rate environment, the increased likelihood of regulatory easing and a shift in Europe’s fiscal framework’.

New dividend policy

In an update, the trust also confirmed its enhanced dividend policy, which will see it pay out quarterly dividends amounting to 4% of NAV each year. Dividends will be paid from available revenue and topped up, if necessary, from capital reserves.

Fees will be cut from 1 July, with a new tiered structure in place of 0.7% up to £500m, which falls to 0.65% thereafter. This is based on 50% of the trust’s NAV and 50% of the lower of market cap or NAV. It was previously a flat 0.7% fee based on NAV. In addition, a performance fee has been scrapped.

Shareholders in PCFT will be offered an opportunity to tender up to 100% of shares at NAV less costs on 30 June, subject to shareholder approval. 

PCFT offers its investors an opportunity to tender up to 100% of shares every five years. The tender offer will happen alongside a secondary placing for the trust’s institutional investors. 

PCFT currently trades at a 3.5% discount to NAV, which Deutsche Numis said reflects the upcoming exit. Over the past five years, the trust’s shares are up 141%. PCFT yields 2%.