Polar starting to warm up

11th Dec 2009 07:54

Fund manager Polar Capital slipped into the red at the interim stage but is seeing assets under management recovering quickly, which should feed through to the bottom line in the second half of the year.Having seen assets under management halve in the previous financial year, the company confirmed that it had lifted assets under management (AUM) by 27% in the six months to 30 September to $1.9bn from $1.5bn at the end of March. However, the end-September figure for 2009 was still below the $2.9bn of assets the company was managing at the end of September 2008, and around $386m of the improvement since March was down to favourable currency movements.Since the end of the reporting period AUM has risen 5.2% to $2.0bn.Assets under management in its long-only funds rose 45.6% in the six month period to $1,086m from $746m, while hedge fund assets grew 15.9% to $810m from $699m.The firm has 58% of its assets in long only funds and 42% allocated to hedge funds. It is primarily exposed to technology stocks (33% of AUM) and Japan (23%).Chief executive Tim Woolley confessed that equity markets had bounced back ‘even stronger than we had expected’ since March.Nevertheless, Woolley said that the company’s core profitability was directly linked to the value of AUM and that ‘given the level of AUM at the start of the period, it is unsurprising that the business delivered a core operating loss of £0.9m.’Loss before tax and share based payments was £0.37m in the six months to 30 September, compared to a profit of £1.55m the year before.Woolley was sanguine about the prospect of increased regulation for the hedge fund industry, saying ‘Polar should be well positioned to deal with it’ having operated in the EU’s ‘Undertakings for Collective Investments in Transferable Securities’ (UCITS) environment since the company was founded in 2001.Woolley believes the UCITS directive is ‘likely to become the fund structure of choice for investors.’The interim dividend has been maintained at 1p.