Fund Overview

Investment Objective

The objective of the Fund is to achieve an attractive level of income by investing primarily in the senior and subordinated debt securities of financial companies globally.

Investment Philosophy

The Fund Manager's investment philosophy is based on a disciplined, consistent and repeatable process. Utilising fundamental quantitative and qualitative analysis, this process enables the Fund to invest across the capital structure of global financial companies.

Background

At the end of December 2023, the Fund’s name was changed from the Polar Capital Income Opportunities Fund to the Polar Capital Financial Credit Fund, and its strategy amended to one focused on investing in fixed-income securities, issued by financial companies. The aim being to benefit from the significant improvement in prospective returns, following the sharp rise in interest rates.

The Polar Capital Income Opportunities Fund was originally launched in October 2009 to provide a lower risk way to participate in the recovery of the financial sector post the financial crisis. This objective was to be achieved by investing in a balance of equities and fixed-income securities.

Key Facts

Team of five sector specialists, with 105+ years of combined experience
Minimum of 40 positions with a focus on senior and Tier 2 bonds
Maximum of 20% exposure to AT1 and RT1 securities
Diversified across systemically important institutions and less known idiosyncratic opportunities
All non-GBP holdings hedged back into GBP to minimise any currency risk

Key Fund Literature

A Guide to Financial Credit

31 Oct 2024

Nick Brind

Fund Manager

Jack Deegan

Fund Manager

George Barrow

Fund Manager

Tom Dorner

Fund Manager

Nabeel Siddiqui

Fund Manager

Nick Brind

Nick joined Polar Capital following the acquisition of HIM Capital in September 2010, and is co-manager of Polar Capital Global Financial Trust and lead manager of the Polar Capital Financial Credit Fund. He has investment experience across a wide range of asset classes but since 2003 has focused on global financials.

Before joining HIM Capital, Nick worked at New Star Asset Management. While there, he managed the New Star Financial Opportunities Fund, a high-income financials fund investing in the equity and fixed-income securities of European financials companies. Previous to that, he worked at Exeter Asset Management and Capel-Cure Myers.

Academic qualificationsMSc in Finance, London Business SchoolDiploma, CISI (Chartered Institute for Securities & Investment), London
Industry experience32 years

Jack Deegan

Jack joined as an analyst in the Financials team in October 2017 and was appointed Fund Manager on the Financial Credit Fund in December 2023. Prior to this, he worked at DBRS Ratings, covering the Swiss market as a lead analyst, as well as UK, Dutch, Japanese and Australian banks. Before DBRS, Jack worked in the Markets Division of the Bank of England for four years, assessing financial institutions with a view to determining access to the Bank's Sterling Monetary Framework (SMF) facilities, and internal counterparty trading limits.

Academic qualificationsBA, Classical Archaeology & Ancient History, Oxford UniversityMA, Islamic Politics, SOAS (School of Oriental and African Studies), London
Industry experience16 years

George Barrow

George joined Polar Capital in September 2010 as an analyst on the Financials Team. He is a co-manager on the Polar Capital Global Financials Trust, with Nick Brind and Tom Dorner.

He has over 10 years’ experience analysing Europe, Asia and emerging markets. Prior to joining Polar Capital, he was an analyst at HIM Capital from 2008 where he completed his IMC.

Academic qualificationsMA (Merit) in International Studies, SOAS (School of Oriental and African Studies), London
Professional qualificationsIMC. Advanced Certificate in Equity & Fixed Income Investment
Industry experience18 years

Tom Dorner

Tom joined Polar Capital as a Fund Manager in the Financials team in December 2023. He is a co-manager on the Polar Capital Global Financials Trust, with Nick Brind and George Barrow.

He joined from Aberdeen where he was a Senior Investment Director in the Developed Markets team and managed the Aberdeen Europe ex UK Income Equity Fund. He was responsible for analytical coverage of European financials and managed a number of other European investment funds during his nine years there. Prior to this, he was an analyst specialising in the European Insurance sector at Citi and Lehman Brothers in London.

Academic qualificationsBA (Hons) in War Studies, Kings College LondonMA in Philosophy, University of Nottingham
Professional qualificationsQualified as a Chartered Accountant with Ernst & Young in the Insurance Audit practice
Industry experience24 years

Nabeel Siddiqui

Nabeel joined the Polar Capital Financials team as an analyst in August 2013 working closely with Nick Brind, focusing on the US, Latin America & Australia.

Prior to this, Nabeel worked as an operations executive at Polar Capital. Nabeel began his career in August 2008 with Habib Bank, where he worked within a variety of functions.

Academic qualificationsBSc (Hons) in Computer Science, Lahore University of Management SciencesMSc in Money and Banking, University of Exeter
Professional qualificationsPassed CFA Level III
Industry experience15 years

Related Insights

Countries in which this fund is available

Please click on each country to see share class availability

Risks:

Capital is at risk and there is no guarantee the Fund will achieve its objective. Investors should make sure their attitude towards risk is aligned with the risk profile of the Fund before investing.

Past performance is not a reliable guide to future performance. The value of investments may go down as well as up and you might get back less than you originally invested as there is no guarantee in place.

The value of a fund’s assets may be affected by uncertainties such as international political developments, market sentiment, economic conditions, changes in government policies, restrictions on foreign investment and currency repatriation, currency fluctuations and other developments in the laws and regulations of countries in which investment may be made. Please see the Fund’s Prospectus for details of all risks.
The fund is exposed to Sustainability risks which are environmental, social and governance factors that could have an actual or potential material negative impact on the value of the Fund and its risk factors.
The Fund invests in fixed income securities, and prices can rise or fall due to several factors affecting global markets.
The Fund uses derivatives which carry the risk of reduced liquidity, substantial loss, and increased volatility in adverse market conditions, such as failure amongst market participants.
The Fund invests in assets denominated in currencies other than the Fund's base currency. Changes in exchange rates may have a negative impact on the Fund's investments. If the share class currency is different from the currency of the country in which you reside, exchange rate fluctuations may affect your returns when converted into your local currency. Hedged share classes may have associated costs which may impact the performance of your investment.
There may be times where the issuer or guarantor of a fixed income (or convertible) security cannot meet its payment obligations or has their credit rating downgraded, resulting in potential losses for the Fund.
The Fund may invest in emerging markets where there is a greater risk of volatility due to political and economic uncertainties, restrictions on foreign investment, currency repatriation and currency fluctuations. Developing markets are typically less liquid which may result in large price movements to the Fund.

Important Information: This is a marketing communication and does not constitute a solicitation or offer to any person to buy or sell any related securities or financial instruments. Any opinions expressed may change. This website does not contain information material to the investment objectives or financial needs of the recipient. This website is not advice on legal, taxation or investment matters. Tax treatment depends on personal circumstances. Investors must rely on their own examination of the fund or seek advice. Investment may be restricted in other countries and as such, any individual who receives this website must make themselves aware of their respective jurisdiction and observe any restrictions.

A decision may be taken at any time to terminate the marketing of the Fund in any EEA Member State in which it is currently marketed. Shareholders in the affected EEA Member State will be given notification of any decision and provided the opportunity to redeem their interests in the Fund, free of any charges or deductions, for at least 30 working days from the date of the notification.

Investment in the Fund is an investment in the shares of the Fund and not in the underlying investments of the Fund. Further information about fund characteristics and any associated risks can be found in the Fund’s Key Information Document or Key Investor Information Document (“KID” or “KIID”), the Prospectus (and relevant Fund Supplement), the Articles of Association and the Annual and Semi-Annual Reports. Please refer to these documents before making any final investment decisions. These documents are available free of charge at Polar Capital Funds plc, Georges Court, 54-62 Townsend Street, Dublin 2, Ireland, via email by contacting Investor-Relations@polarcapitalfunds.com or at www.polarcapital.co.uk. The KID is available in the languages of all EEA member states in which the Fund is registered for sale; the Prospectus, Annual and Semi-Annual Reports and KIID are available in English.

The Fund promotes, among other characteristics, environmental or social characteristics and is classified as an Article 8 fund under the EU's Sustainable Finance Disclosure Regulation (SFDR). For more information, please see the Prospectus and relevant Fund Supplement.

ESG and sustainability characteristics are further detailed on the investment manager’s website: https://www.polarcapital.co.uk/ESG-and-Sustainability/Responsible-Investing/.

A summary of investor rights associated with investment in the Fund can be found here. This document is provided and approved by both Polar Capital LLP and Polar Capital (Europe) SAS.

Polar Capital LLP is authorised and regulated by the Financial Conduct Authority (“FCA”) in the United Kingdom, and the Securities and Exchange Commission (“SEC”) in the United States. Polar Capital LLP’s registered address is 16 Palace Street, London, SW1E 5JD, United Kingdom.

Polar Capital (Europe) SAS is authorised and regulated by the Autorité des marchés financiers (AMF) in France. Polar Capital (Europe) SAS’s registered address is 18 Rue de Londres, Paris 75009, France.

Polar Capital LLP is a registered Investment Advisor with the SEC. Polar Capital LLP is the investment manager and promoter of Polar Capital Funds plc – an open-ended investment company with variable capital and with segregated liability between its sub-funds – incorporated in Ireland, authorised by the Central Bank of Ireland and recognised by the FCA. FundRock Management Company (Ireland) Limited acts as management company and is regulated by the Central Bank of Ireland. Registered Address: Percy Exchange, 8/34 Percy Place, Dublin 4, Ireland.

For UK Investors: The Fund is recognised in the UK under the Overseas Funds Regime (OFR) but it is not a UK-authorised Fund. UK investors should be aware that they may not be able to refer a complaint against its Management Company or its Depositary to the UK's Financial Ombudsman Service. Any claims for losses relating to the Management Company or the Depositary will not be covered by the Financial Services Compensation Scheme, in the event that either entity should become unable to meet its liabilities to investors. For information on the complaint process to the Management Company, please see the Country Supplement for this fund available at https://www.polarcapital.co.uk/

Third-party Data: Some information contained herein has been obtained from third party sources and has not been independently verified by Polar Capital. Neither Polar Capital nor any other party involved in or related to compiling, computing or creating the data makes any express or implied warranties or representations with respect to such data (or the results to be obtained by the use thereof), and all such parties hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability or fitness for a particular purpose with respect to any data contained herein.

Information Subject to Change: The information contained herein is subject to change, without notice, at the discretion of Polar Capital and Polar Capital does not undertake to revise or update this information in any way.

Benchmark: The Fund is actively managed and uses the ICE BofA Global Financial Index as a performance target. The benchmark has been chosen as it is generally considered to be representative of the investment universe in which the Fund invests. The performance of the Fund is likely to differ from the performance of the benchmark as the holdings, weightings and asset allocation will be different. Investors should carefully consider these differences when making comparisons. Further information about the benchmark can be found https://www.ice.com/iba. The benchmark is provided by an administrator on the European Securities and Markets Authority (ESMA) register of benchmarks which includes details of all authorised, registered, recognised and endorsed EU and third country benchmark administrators together with their national competent authorities.

Country Specific Disclaimers Please be aware that not every share class of every fund is available in all jurisdictions. When considering an investment into the Fund, you should make yourself aware of the relevant financial, legal and tax implications. Neither Polar Capital LLP nor Polar Capital Funds plc shall be liable for, and accept no liability for, the use or misuse of this document.

The Fund is registered for sale to all investors in the countries listed above. Investors should make themselves aware of the relevant financial, legal and tax implications if they choose to invest.

An ESG Framework for the Financials sector

Our integrated approach ensures that we are considering a wide range of Environmental, Social and Governance factors as part of the Fund’s investment process. This enables us to build a holistic view of a company’s ESG profile, identifying laggards and areas for ongoing engagement.

We place a strong emphasis on good governance, which we believe is critical to the performance of financial institutions and helps to drive change and progress on environmental and social factors.

ESG Policy Documents

SFDR Level 2 Website Disclosure

29 Dec 2023

SFDR: Refers to the EU Sustainable Finance Disclosure Regulation.

Exclusions

Applying norms-based and negative screens

Whilst the Financial Credit Fund implicitly avoids certain sectors due to its thematic focus, its initial investment universe is also subject to the following two exclusion criteria. Ideas which do not suitably align with either of these are unsuitable for investment, and are not considered any further for inclusion into the portfolio. For the avoidance of doubt, these normative and negative screens apply to investments made in equity and corporate bond issuers. However, the exclusion criteria does not apply to Sovereign exposure. The following are explicitly excluded:

1. Norms-based screening

This ensures that potential investee companies that are involved in controversial practices are excluded from investment. We consider a number of different international conventions as part of this process, such as the UN’s Global Compact.

2. Negative screening

We also exclude companies we believe may have a negative impact on the world by virtue of their business activities. This includes companies that derive more than five percent of their revenues from the following:

Thermal coal extraction, production and generation

Oil exploration and production

Tobacco production and distribution

Adult entertainment

Conventional weapons production

Investment Integration

A fully integrated investment approach

The Management metric includes an ESG score and qualitative ESG overlay, based on an assessment of a company’s governance framework. If a company, corporate bond issuer or Sovereign performs poorly against these screening metrics, it will not be considered eligible for investment. If it screens well, further fundamental analysis is undertaken.

ESG Integration

Scoring potential investments against our ESG Framework

Following the initial screening exercises, we evaluate potential investee companies, corporate bond issuers and Sovereigns against a variety of ESG indicators. Following evaluation against this framework, they are scored across three weighted categories, then combined to reach a final ESG rating between AAA and CCC.

Governance factors are assigned the largest weighting in the methodology, as the Financials team believe good governance is critical to the performance of financial institutions, helping to drive change from an environmental and social perspective.

Companies, corporate bond issuers and Sovereigns scoring CCC and below are deemed not suitable for investment, as are companies that score a CCC in the Governance category specifically. ESG indicators include but are not limited to:

Environmental (20% Weighting)

GHG emissions, extent of environmental disclosure, and attainability of net zero targets.

Social (35% Weighting)

Level of gender diversity in the workforce, level of human capital development within a company, and the quality of data security.

Governance (45% Weighting)

Level of shareholder alignment and engagement, board experience, diversity and independence, director remuneration and tax compliance.

Engagement

Building a holistic view through proactive engagement

Portfolio holdings with a rating of B (immediately above the CCC threshold) are automatically subject to advanced due diligence. The Financials team engage with the company or corporate bond issuer to address any identified weakness with management and obtain reassurance that shortfalls are being addressed.

Engagement is not, however, confined to companies with a B rating only. The Financials team regularly interact with investee companies on a wide range of ESG-related topics. Engagement is not undertaken with issuers of Sovereign bonds. Forms of engagement include:

Written Communications

Company Meetings

Shareholder Votes

Related Insights

Countries in which this fund is available

Please click on each country to see share class availability

Risks:

Capital is at risk and there is no guarantee the Fund will achieve its objective. Investors should make sure their attitude towards risk is aligned with the risk profile of the Fund before investing.

Past performance is not a reliable guide to future performance. The value of investments may go down as well as up and you might get back less than you originally invested as there is no guarantee in place.

The value of a fund’s assets may be affected by uncertainties such as international political developments, market sentiment, economic conditions, changes in government policies, restrictions on foreign investment and currency repatriation, currency fluctuations and other developments in the laws and regulations of countries in which investment may be made. Please see the Fund’s Prospectus for details of all risks.
The fund is exposed to Sustainability risks which are environmental, social and governance factors that could have an actual or potential material negative impact on the value of the Fund and its risk factors.
The Fund invests in fixed income securities, and prices can rise or fall due to several factors affecting global markets.
The Fund uses derivatives which carry the risk of reduced liquidity, substantial loss, and increased volatility in adverse market conditions, such as failure amongst market participants.
The Fund invests in assets denominated in currencies other than the Fund's base currency. Changes in exchange rates may have a negative impact on the Fund's investments. If the share class currency is different from the currency of the country in which you reside, exchange rate fluctuations may affect your returns when converted into your local currency. Hedged share classes may have associated costs which may impact the performance of your investment.
There may be times where the issuer or guarantor of a fixed income (or convertible) security cannot meet its payment obligations or has their credit rating downgraded, resulting in potential losses for the Fund.
The Fund may invest in emerging markets where there is a greater risk of volatility due to political and economic uncertainties, restrictions on foreign investment, currency repatriation and currency fluctuations. Developing markets are typically less liquid which may result in large price movements to the Fund.