The group’s quarterly update, published 10 April, showed a 7.5% drop in total AUM in the 12 months to 31 March, down from $13.2bn (£9bn) to $12.3bn (£8.3bn).
Polar attributed the decrease in large part to a $2.3bn (£1.56bn) net outflow from its Japan business, a figure made more significant by the $3bn (£2bn) of inflows that were recorded in the 12 months prior.
As a result, the Japan arm now accounts for 30% of Polar’s AUM, having formerly represented 43% – a slide which the firm described as making its business ‘more balanced’.
Polar highlighted the Japan investment team’s style bias combined with investor uncertainty over the direction of the Japanese equity market as a key factor in the reversal of fortune.
However, Steven Bell, chief economist and director of global macro at F&C Investments, believes that, rather than harbouring reservations over Japan, investor sentiment is widely optimistic.
“I don’t think investors are selling Japan,” he said. “Non-residents buying Japanese equities has been volatile but broadly positive. It has had a fluctuation of around zero in the past five years and has been positive since the start of 2015.
“I think is it something more specific to Polar Capital – there is no theme there. If anything, there has been more foreign investment into Japan recently.”
AUM in Polar’s long-only funds dropped 9.5% to $11.2bn (£7.6bn), down from $12.3bn (£8.4bn) in 2014, including net redemptions of $2.3bn (£1.5bn).
However, this was off-set to a degree by its alternative vehicles seeing an influx of $254m (£173.3m) in the same period.
Polar said in a statement: “We continue to believe that over the medium-term the group is well-placed to grow assets further given the number of products that have considerable scope for asset growth, including the launch of 3 new funds over the past year.”