Polar Capital Global Financials trust to cut fees as it extends life cycle
No longer fixed life structure
The board of the Polar Capital Global Financials trust intends to reduce the management fee on the vehicle as it announces plans to extend the life of the investment trust past the original fixed seven-year term.
Under the proposals, the current fixed term structure will change to provide all shareholders with a five-year tender offer, and the existing commitment to wind up the company by 31 May will be deleted from the prospectus.
Any shareholders wishing to exit the trust will be able to get their money back at the prevailing NAV per ordinary share, minus costs, which are not expected to be higher than 100bps.
However, the new plan is conditional on the size of the company remaining large enough to continue running; currently the trust has £299m in assets.
As the trust moves to a new structure, it will see its annual management fee reduced from 0.85% to 0.7% of NAV. Additionally, the performance fee will be subject to a higher hurdle rate, the board said.
At the same time, the trust will increase its maximum level of gearing to 20% from the current level of 15% of NAV with the aim of potentially enhancing returns.
Another change being implemented is a switch of the benchmark from the MSCI World Financials + Real Estate Net Total Return index to the MSCI ACWI Financials Net Total Return index, to reflect the trust's level of exposure to EM financials and lack of exposure to real estate.
A shareholder circular with additional information is expected to be published in early March, with the tender offer expected to complete in mid to late April, subject to shareholder and regulatory approvals.
The trust is currently trading on a discount of 4.1% and has returned 18.8% in NAV terms over three years to 5 February versus the IT Financials sector average of 16.1%, according to FE fundinfo.
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