Heavy outflows and a tough market dragged Polar Capital’s assets under management (AUM) down 13% in the year to 31 March, driving down profits at the boutique.
AUM finished the year at £19.2bn, having begun it at £22.1bn, and the corresponding reduction in fee revenues across the 12 months meant core operating profit fell 31%.
Core operating profit, which measures profit before performance fees, other income, and tax, fell from £69.4m in 2022 to £47.9m. During FY2022, core profits grew 35%.
Profit before tax for the year amounted to £45.2m, down from £62.1m in 2022.
More than half of the loss of AUM was a result of outflows, with £1.5bn of redemptions across the year. This was largely a result of clients pulling £1.2bn from the firm’s Technology strategy.
CEO Gavin Rochussen (pictured) said the decline in AUM and the net outflows were “modest relative to industry wide outflows”.
The group also took a £500m hit to AUM from the Phaeacian fund closure.
The first quarter of Polar’s financial year proved to be the most damaging, recording a £3.2bn loss in AUM, but the firm began to recover as the year progressed.
In the final three quarters of the year, AUM remained largely flat, growing slightly from £18.8bn to the £19.2bn.
Despite the falling profits and loss of assets, Rochussen said: “Investment performance, including that of our world-class Technology strategy, has improved over the year notwithstanding the headwind for growth stocks.
“As of 31 March 2023, 79% of our Ucits funds’ AUM were in the top two quartiles against the Lipper peer group over one year, 65% in the top two quartiles over three years with 87% and 93% in the top two quartiles over five years and since inception respectively.”
“It is notable that no less than 88% of our Ucits AUM is in the first quartile against the Lipper peer group since inception.”
