Polar Capital Hits Record £26.7bn Assets Under Management in Interim Results

Polar Capital’s record AuM and what’s really driving it

Polar Capital’s interim numbers show a business surfing the AI wave, even as industry flows remain tricky. Assets under management (AuM) jumped 25% in six months to a record £26.7bn at 30 September 2025, and have since climbed to £28.4bn by 7 November. That growth was overwhelmingly market driven: strong technology performance added heft, while net client money still leaked out overall.

Here’s the key split: £6.3bn came from investment performance and market movement; net outflows were £690m; and there was a £280m one‑off capital return tied to an investment trust tender. The big picture is positive, with momentum improving into the second quarter.

Headline numbers investors should know

Metric	H1 FY26	YoY/Notes
AuM (30 Sep 2025)	£26.7bn	Up 25% from £21.4bn
AuM (7 Nov 2025)	£28.4bn	Post period-end update
Average AuM	£23.2bn	Up 4% vs £22.4bn
Net flows	£(690)m	Q1 £(632)m, Q2 £(58)m
One‑off capital return	£280m	Global Financials Trust tender
Profit before tax	£27.9m	Up 21% (2024: £23.1m)
Core operating profit	£25.1m	Down 8% (2024: £27.3m)
Basic EPS	21.1p	Up 22% (2024: 17.3p)
Adjusted diluted total EPS	21.9p	Down 8% (restated 2024: 23.8p)
Net management fees	£86.8m	Flat (2024: £87.6m)
Management fee yield	75 bps	Down 3 bps
Core operating margin	29%	Down from 31%
Interim dividend	14.0p	Ex‑div 11 Dec; pay 9 Jan 2026

Technology-led mix: the engine under the bonnet

Polar Capital is now a tech‑tilted manager. Technology strategies account for £13.6bn, or 51% of total AuM, up from £9.0bn at March. Healthcare is £3.8bn (14%), Global Insurance £2.5bn (9%), and Emerging Markets and Asia £3.6bn (13.5%). On vehicle type, open‑ended funds are £19.9bn (75%), investment trusts £6.3bn (23%), and segregated mandates £0.5bn (2%).

Why it matters: performance in big tech and AI has been the tailwind, but concentration cuts both ways. If AI enthusiasm cools, fee revenue – already seeing a small margin squeeze – could feel it.

Flows: a tough start, then a sharp improvement

Industry headwinds persisted, and Polar posted net outflows of £690m for the half. Most of the pain was early: Q2 net outflows were just £58m versus £632m in Q1. Outflows were concentrated in Healthcare (£273m), European (£154m), UK Value (£59m) and Emerging Markets (£213m, including an SMA closure).

Offsetting this, demand broadened elsewhere. The AI, Global Technology, Asian Stars, Japan Value, Global Insurance, Financial Credit, Global Absolute Return and International Small Company funds together drew £195m of net inflows. Notably, the open‑ended Global Technology Fund swung from £162m of Q1 outflows to £226m of Q2 inflows. A new Biotechnology SMA from a US endowment added £93m.

My take: the inflection in Q2 matters more than the half-year total. If that trend holds, Polar should move back towards net inflows, especially with a richer US distribution push.

Performance scorecard: winners, laggards and dispersion

Several strategies delivered strongly: Global Technology, the Technology Trust and the Artificial Intelligence Fund rebounded after a weak first quarter; Healthcare Opportunities and Biotechnology outperformed; Smart Energy and Convertibles also posted good results.

On the flip side, Emerging Markets Stars lagged given a China underweight and stock‑specific issues. Within Financials, the Global Financials Trust underperformed, though the Financial Credit Fund beat its benchmark. Several European regional and single‑country strategies trailed, with Polar Capital Japan Fund the exception.

Across UCITS funds, 68% of AuM sits in the top two peer‑group quartiles over one year, 67% over three years, 85% over five years and 100% since inception. That depth helps sales teams, but dispersion in markets increases the risk of near‑term reversals.

Earnings quality and margins: what’s behind the PBT rise

Profit before tax rose 21% to £27.9m, but the cleaner lens is core operating profit, down 8% to £25.1m. Net management fees were broadly flat at £86.8m despite higher average AuM, as the fee yield slipped 3 bps to 75 bps due to mix, fee changes on the Technology Trust and a weaker US dollar.

Total operating costs fell 6% to £63.4m because last year had impairment charges. Strip those out and underlying costs were up 3%, driven by higher share‑based payments and investment in US marketing and digital content. The core operating margin edged down to 29% from 31% – not alarming, but worth watching if fee pressure persists.

Investment trusts: continuation secured, tender executed

Polar’s trusts are roughly one quarter of group AuM and remain strategically important. The Global Financials Trust completed a scheduled tender, returning £280m and restarting a five‑year term with net assets of £360m. The Technology Trust secured an overwhelming continuation vote, with about 99% in favour. The Global Healthcare Trust has a scheduled tender planned for early December 2025, subject to approval.

Opinion: governance discipline through tenders can crimp AuM in the short run but helps long‑term credibility, especially when discounts bite. Continuation votes going through smoothly are a relief.

Dividend, balance sheet and buybacks

The Board declared an interim dividend of 14.0p, payable on 9 January 2026, with an ex‑dividend date of 11 December and record date of 12 December. That equates to a 77% payout of first‑half adjusted diluted core EPS, signalling confidence in earnings resilience.

Cash and cash equivalents were £82.5m at period end (down from £121.8m in March) after paying £30.9m of dividends and purchasing £3.0m of own shares. Net assets stood at £126.2m versus £134.4m at March. The balance sheet remains solid for a boutique manager.

Client base and distribution runway

The investor mix is still UK‑heavy at 61% of AuM, with Europe at 26%, Asia 6%, Nordics 4% and North America 2%. Management is targeting a “step‑change” in the US while building on Asia. If executed, that could diversify flows and reduce reliance on UK retail and European wholesale channels.

What to watch next

• Net flows in Q3 and Q4 – does the Q2 improvement persist and flip to net inflows?
• Fee yield – can Polar defend the 75 bps management fee margin as mix shifts and FX moves?
• Technology concentration – with tech now 51% of AuM, market reversals would bite revenues.
• Trust activity – outcome of the Global Healthcare Trust tender and discount management across the trust range.
• US distribution – early evidence that investment in US marketing converts pipeline into durable mandates.

Josh’s view: a good half masked by mix effects

This is a solid set of interims. Record AuM, a strong bounce in technology strategies and visible improvement in flows through the quarter are all clear positives. The dividend is held at 14.0p, backed by cash and a sturdy balance sheet.

The nits to pick: fee margin drift, an 8% drop in core operating profit and continued outflows in Healthcare, Europe and Emerging Markets. None of that is fatal, but it underscores why management is leaning into distribution and targeted fixes. With AuM already £28.4bn post period‑end and enthusiasm for AI still supportive, Polar has the wind at its back – it now needs to convert interest into consistent net inflows while keeping tight control of costs.

Bottom line: momentum is improving, the platform is scalable and the brand remains strong. If flows turn positive and margins stabilise, there’s scope for earnings to compound from here.