Polar Capital Global H1 NAV return falls but outperforms benchmark

Polar Capital Global Financials Trust (PCGF) reported a 0.59% fall in net asset value return for the half year, although it managed to outperform its benchmark index.

The portfolio's benchmark, the MSCI World Financials Index (Total Return with dividends reinvested), returned -0.84% over the same period, PCGF said.

Since the company's inception in July 2013 the company has achieved a fully diluted NAV total return of 19.18% compared to the benchmark return of 17.71%, it added.

“During the six month period under review, your company has faced significant headwinds in global equity markets and volatile sentiment shifts, particularly towards financial stocks,” PCGF told shareholders.

“Our fund managers have navigated the portfolio carefully through this period, helped by good stock selection. The price of our ordinary shares closed the period at 97.75p, a decline of 6.0% since the end of the last financial year on 30 November 2015."

"The company's share price total return (at -4.51%) lagged the portfolio's net asset value performance as the share price discount widened from 6.7% to 10.5% at the end of the period."

The company has declared an interim dividend of 1.95p per share, an increase of 5.4% over last year.

“The first half of the period under review was a difficult one for financial stocks. Fears of weakening growth, falling energy prices, negative interest rates and the announcement of a referendum on Britain's membership of the EU combined to present a perfect storm for financial companies,” PCGF said.

“At the time of writing in the immediate aftermath of the referendum, the impact of market volatility on the portfolio's NAV has been modest, particularly when compared to the sharply negative share price performance of UK banks. Relative to benchmark, there has been a more significant negative impact given the portfolio's underweight exposure to US financials and its overweight exposure to challenger banks in the UK.”

"Although the political and economic uncertainty that followed the Brexit vote is unlikely to fade quickly, it is worth noting that the market volatility that is likely to continue well into the rest of the year is a reaction on this occasion to a political and not a financial crisis."