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(Alliance News) - Polar Capital Global Financials Trust PLC on Tuesday reported that it underperformed against its benchmark in financial year 2022, noting high inflation and "the end of an unprecedented easy money era" due to higher interest rates.
Polar Capital is a London-based investor in financial companies for income and capital growth.
Net asset value per share as at November 30 fell 0.7% to 166.3 pence from 167.5p a year prior. NAV total return was 1.9%, underperforming against its benchmark MSCI ACWI Financials which returned 6.8%. NAV fell despite a positive return due to the dividend reinvestment factor. For financial year 2022 ended November 30, Polar Capital paid a total dividend of 4.45p per share, up from 4.40p a year prior.
"The impact of rising interest rates, further lockdowns in China, Russia's invasion of Ukraine and the resulting impact on energy prices, and volatility in the UK gilts market hit sentiment and more than offset better corporate earnings. The strength of the US dollar cushioned falls for sterling investors, as did a late rally in equity markets in October and November," the company said.
It added that an inverting US yield curve showed levels not seen since the 1980s, which it explained was a historically good predictor of recessions. An inverting yield curve means that the interest rate on long term bonds is lower than that on shorter dated bonds.
Looking ahead, Polar Capital said it is in a good position to navigate economic setbacks, noting near-term uncertainty which remained high. It added that its portfolio is balanced.
Polar Capital shares fell 1.2% to 160.00 pence each in London on Tuesday morning.
By Tom Budszus, Alliance News reporter
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