Polar Capital shares drop despite rise in AuM

(Sharecast News) - Polar Capital shares were in the red on Monday, even after it reported a sharp rise in assets under management in the first half of its financial year on Monday, helping lift profits despite continued industry-wide net outflows. The AIM-traded specialist fund manager said AuM increased 25% to a record £26.7bn at 30 September, up from £21.4bn at the end of March, and had risen further to £28.4bn by 7 November.

Profit before tax rose 21% to £27.9m, although core operating profit slipped 8% to £25.1m amid weaker net flows.

The group recorded net outflows of £690m during the period, compared with inflows of £472m a year earlier, with the figure including a one-off £280m return of capital in June after the Polar Capital Global Financials Trust undertook a 100% tender offer.

Outflows were concentrated in healthcare, European and UK value strategies, while emerging market products also saw redemptions following the closure of a separately managed account.

The pressures were heavily weighted to the first quarter, with second-quarter net outflows moderating to £58m from £632m.

Demand was stronger across several growth-oriented and thematic funds.

The company reported net inflows of £195m into strategies including artificial intelligence, Global Technology, Asian Stars, Japan Value, Global Insurance, Financial Credit, Global Absolute Return and International Small Company.

A new biotechnology separately managed account also secured an initial £93m from a US endowment.

Investment trusts remained a significant part of the business, representing around a quarter of total AuM, with shareholders voting to continue both the Global Financials Trust and the Technology Trust.

Basic earnings per share rose 22% to 21.1p, while adjusted diluted total earnings per share fell 8% to 21.9p after restatements to prior-year figures.

The board declared an interim dividend of 14p per share, unchanged from January, to be paid on 9 January 2026.

"The first half of Polar Capital's financial year ended on a positive note for equity markets and our meaningful technology exposure was a clear tailwind," said chief executive Iain Evans.

"While industry headwinds persisted and we recorded net outflows of £690m ... these were heavily weighted in the first quarter."

He noted that the leadership transition had been "seamless" and said the group was "well placed for the cycle ahead."

Evans added that the macro environment remained volatile but the company would "scale where we are strongest, apply targeted fixes where needed, diversify selectively, and leverage distribution - particularly in the US," emphasising that Polar Capital was "well positioned to scale through differentiation and deliver long-term value for clients and shareholders."

At 1247 GMT, shares in Polar Capital Holdings were down 3.65% at 528p.

Reporting by Josh White for Sharecast.com.