CEO Rochussen: 'Passive pressure' drove Polar Capital outflows
Profits fall but AUM proves resilient
Net outflows "dwarfed" inflows over the year ending 31 March 2020 as Polar Capital's North American fund suffered combined pressures of passive products and underperformance, according to CEO Gavin Rochussen.
The firm's North American equity fund recorded net outflows of £1.1bn, which Rochussen attributed to "passive pressure" as it is "very difficult" for active managers to outperform the benchmark, along with the "value biased fund" also struggling in a growth market, all combined to produce underperformance in the fund.
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Combined with the £485m "expected" outflows of the Japan funds, which the CEO credited to the merging of funds and the asset class simply "not getting the same kind of traction as it did", net outflows dominated despite the majority of funds receiving net inflows.
Pre-tax profits suffered over the past year, according to the annual results, falling to £50.8m from last year's £64.1m but average assets under management rose to £14.1bn from £13.6bn.
Net management fees increased to 31 March 2020, rising from £113.5m to £119.5m but performance fee profit collapsed of 60% to £8.8m from 2019's record £24m.
While AUM was markedly lower at then-end of the financial year, down to £12.2bn from the previous year's figure of £13.8bn, it had rallied strongly in line with the market and had risen to £14.4bn by 29 May 2020.
Almost half of the firm's AUM resides in its technology strategy, which accounts for 43% (£5.3bn) of the total, and these funds have enjoyed strong performance, according to Rochussen.
"Our technology and EM Stars fund ranges have had particularly good performance, with both the EM Stars and automation and artificial intelligence funds in the top decile, measured against their respective Lipper peer groups since inception and over one year.
"The global technology fund is top quartile over one year and top decile over three and five years, and since inception."
Global Technology and EM Stars both featured in the largest net inflows list at £316m and £46m respectively, a list that also contained UK Value Opportunities, bolstered by £280m of net inflows, which accounted for nearly a third of the total AUM of the fund.
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