A near-mirror of Polar Capital's existing long/short UK equity fund, Polar Capital UK Absolute Return Fund offers retail investors access to a hedge-fund strategy via a regulated structure with daily liquidity.
Domiciled in Dublin, the retail fund was launched in June last year and is managed by ex-Schroders manager Philip Hardy, who also founded the UK team at Polar Capital.
The investment approach underpinning both funds sees Mr Hardy investing predominantly in UK equities, and to a significantly lesser degree European and global equities. The bias here is towards large-cap and upper-end mid-cap companies, with a long-term contrarian investment style.
Mr Hardy manages the Polar Capital UK Absolute Return Fund by combining top-down macro and market views with a rigorous bottom-up analysis, and also hedging. "Bringing all three of these processes together is a key differentiator in terms of what we do," he says. "A good example just lately is where we have brought in the risk on the portfolio by adapting our short book and bringing in exposed levels on the fund, thereby reducing volatility dramatically."
The reason for this shift, says Mr Hardy, is a belief that the market is looking much more vulnerable to the downside than the upside after its strong rally. "Momentum is coming out of the market, and it is probably vulnerable to profit-taking. We would not be surprised if markets took a breather after their recent strong performance," he says.
The Polar Capital UK Fund, the hedge fund on which the Polar UK Absolute Return Fund is based, was launched in November 2001 and boasts a sterling track record. The fund has not had a down year since its inception and is up more than 100 per cent since its launch, compared with the All-Share index which has only climbed a paltry 4 per cent.
| POLAR CAPITAL UK ABSOLUTE RETURN A | |||
|---|---|---|---|
| PRICE: | 11.03p | SHARPE RATIO: | 0.05 |
| SIZE OF FUND: | £73.7m | 3-MONTH PERFORMANCE: | 12.90% |
| No OF POSITIONS: | 47 | 6-MONTH PERFORMANCE: | 11.30% |
| SET-UP DATE: | 6 June 2008 | 1-YEAR PERFORMANCE: | 8.96% |
| MANAGER START DATE: | 6 June 2008 | TOTAL EXPENSE RATIO: | 1.69% |
| BETA: | 0.39 | YIELD: | na |
| VOLATILITY: | 2.49 | MINIMUM INVESTMENT: | One Share |
| TRACKING ERROR: | 3.01 | MORE DETAILS: | polarcapital.co.uk |
Source: www.ft.com/funds, Polar Capital
Top five long positions
| Holding | Percentage |
|---|---|
| Rio Tinto | 4.8% |
| BP | 4.8% |
| BG Group | 3.6% |
| Compass Group | 3.0% |
| Segro | 3.0% |
Net Sector Exposure
| Segment | Percentage |
|---|---|
| Cyclicals | 20.5% |
| Financials | 9.2% |
| Defensives | -3.0% |
| Options | 0.5% |
| Futures | -19.6% |
