Polar Capital has confirmed it is winding up its UK Absolute Equity fund due to the poor health of its fund manager.
The fund, managed by Guy Rushton, had been among the top-performers in the Investment Association Targeted Absolute Return sector but its performance has faltered during the coronavirus sell-off. It had held £472.17m at the time of its February factsheet but that has since fallen to £292.2m.
Polar Capital has now sent a letter to investors informing them the fund has been suspended with immediate effect so that an orderly wind down of the fund can occur.
Polar UK Absolute Equity performance
| 2020 | 2019 | 2018 | 2017 | 2016 | 2015 | |
| Polar Capital UK Absolute Equity | -30.83 | 7.44 | -0.87 | 47.51 | 7.49 | 20.00 |
| IA Targeted Absolute Return sector | -4.73 | 4.38 | -2.81 | 3.39 | 1.06 | 2.41 |
| Libor GBP 3 Months TR in GB | 0.18 | 0.81 | 0.72 | 0.36 | 0.50 | 0.57 |
Source: FE Fundinfo
“The decision to terminate the fund has been prompted by the poor health of the individual fund manager,” the letter said.
“Over the past few weeks and due to the unprecedented market turmoil caused by the Covid-19 pandemic, Polar’s risk team and central dealing desk has, at the request and with the consent of the fund manager, stepped in to provide assistance and support to the fund manager as he decided to reduce the fund’s risk.
“Regrettably it has been concluded that the short term respite has not been sufficient to enable a realistic full time return of the fund manager to his position and so the decision of the directors is that it is appropriate to suspend dealing in the fund with immediate effect to allow an orderly realisation of the assets of the fund and for cash proceeds to be returned to investors.”
Portfolio Adviser understands the illness is not Covid-19.
AJ Bell head of active portfolios Ryan Hughes said the situation highlights the importance of a team-based approach.
Hughes said he prefers absolute return funds with a different return profile than the Polar UK Absolute Equity fund, pointing to Janus Henderson Absolute Return and Artemis US Absolute Return as examples. “They are very, very different to this. They run very low risk funds with a focus on cash-plus returns and they’re all about managing that downside.”
In contrast, he said the Polar fund produced equity-like returns and was more comparable to a fund like Odey Absolute Return.
> See also: How have absolute return funds fared against Covid-19 volatility?
The fund will terminate on 15 May, although Polar Capital said it was likely to be able to divest into cash during a shorter time frame. At that point it would lift the suspension so investors could retrieve their money.
Investors needed to be given at least 30 days’ notice before the termination of the fund under its prospectus and memorandum and articles of association.
Anyone remaining in the fund at the termination date will have their cash returned on a pro rata basis.
Polar Capital has updated markets about the development but said the termination of the fund was “immaterial” to the core profitability of the group.
It said the action would have no impact on the management of any of its other funds.
> See also: Polar Capital acquires global value team from little-known US boutique
