Polar Capital Global - Final Results
16/02/2024 07:00
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RNS Number : 3529D Polar Capital Global Financials Tst 16 February 2024
POLAR CAPITAL GLOBAL FINANCIALS TRUST PLC
Legal Entity Identifier: 549300G5SWN8EP2P4U41
AUDITED ANNUAL RESULTS ANNOUNCEMENT FOR THE YEAR ENDED
30 NOVEMBER 2023
PERFORMANCE HIGHLIGHTS FOR THE YEAR ENDED 30 NOVEMBER 2023
Performance (Sterling total return) For the year ended Since Inception
30 November 2023 % %
Net asset value (NAV) per ordinary share* (1) -2.8 119.7
Ordinary share price* (2) -7.5 87.9
Ordinary share price including subscription share value* (3) - 91.8
Benchmark (Sterling total return) (4) 0.3 124.0
MSCI ACWI Financials 0.3 135.6
Chain-linked benchmark
Other Indices and peer group (Sterling total return)
MSCI World Index 6.9 204.2
FTSE All Share Index 1.8 76.5
Lipper Financial Sector (5) -2.2 103.5
Performance since Reconstruction on 22 April 2020 (Sterling total return) Since Reconstruction %
NAV per ordinary share* (6) 68.8
Benchmark (4) 67.7
Financials As at As at %
30 November 30 November Change
2023 2022
Total net assets £488,198,000 £541,272,000 -9.8
NAV per ordinary share 158.1p 166.3p -4.9
Ordinary share price 138.8p 154.6p -10.2
Discount per ordinary share* (12.2%) (7.0%)
Net gearing* 6.5% 6.0%
Earnings per Ordinary share (7) For the year ended For the year ended
30 November 2023 30 November 2022
Revenue Return 4.97p 4.45p
Capital Return (9.84p) (2.75p)
Total (4.87p) 1.70p
Expenses*
Ongoing Charges 0.86% 0.87%
Ongoing charges including performance fee (8) 0.86% 0.65%
Dividends (9)
The Company has paid or declared the following dividends relating to the
financial year ended 30 November 2023:
Pay date Amount per ordinary share Record date Ex-date Declared Date
Ordinary Shares
In issue
First interim: 2.45p 315,955,329 4 August 2023 3 August 2023 11 July 2023
31 August 2023
Second interim: 2.10p 307,160,405 2 February 2024 1 February 2024 18 January 2024
29 February 2024
Total (2022: 4.45p) 4.55p
Note 1
The total return NAV performance for the period is calculated by reinvesting
the dividends in the assets of the Company from the relevant ex-dividend date.
Performance since inception has been calculated using the initial NAV of 98p
and the NAV on 30 November 2023. Dividends are deemed to be reinvested on the
ex‑dividend date as this is the protocol used by the Company's benchmark and
other indices.
Note 2
The total return share price performance is calculated by reinvesting the
dividends in the shares of the Company from the relevant ex-dividend date.
Performance since inception has been calculated using the launch price of 100p
to the closing price on 30 November 2023.
Note 3
The total return share price performance since inception includes the value of
the subscription shares issued free of payment at launch based on one for
every five Ordinary shares and assumes such were held throughout the period
from launch to the final conversion date of 31 July 2017. Performance is
calculated by reinvesting the dividends in the shares of the Company from the
relevant ex-dividend date and uses the launch price of 100p per Ordinary share
and the closing price per Ordinary share on 30 November 2023.
Note 4
Chain linked benchmark is a combination of 3 benchmarks which have been in
operation over the period. From inception until 31 August 2016 the Company's
benchmark was the MSCI World Financials Index, which included Real Estate as a
constituent until its removal that year. From 1 September 2016 to 23 April
2020 the benchmark was the MSCI World Financials + Real Estate Net Total
Return Index. From 23 April 2020, the benchmark changed to MSCI ACWI
Financials Net Total Return Index (in Sterling) due to the Company's exposure
to emerging market equities and its limited exposure to real estate equities.
Note 5
Dynamic average of open-ended funds in the Lipper Financial Sector Universe
which comprised 55 open ended funds in the year under review.
Note 6
The total return NAV performance since the Reconstruction is calculated by
reinvesting the dividends in the assets of the Company from the relevant
ex‑dividend date. The new performance fee period runs from the date of the
Reconstruction. The opening NAV for the performance fee of 102.8p is the
closing NAV the day before the tender offer was completed.
Note 7
Refer to Note 11 below for more details.
Note 8
The prior year decrease in ongoing charges including performance fee reflects
the write back of the performance fee accrual for the year ended 30 November
2022.
* Alternative Performance Measure, see below for further
explanations.
Data sourced by HSBC Securities Services Limited and Polar Capital
LLP.
.
Status of Announcement
The figures and financial information contained in this announcement are
extracted from the draft unaudited financial results for the year ended 30
November 2023 and do not constitute statutory accounts for that year. Once
finalised, the Annual Report and Financial Statements will include the Report
of the Independent Auditors which is expected to be unqualified and not
expected to contain a statement under either section 498(2) or Section 498(3)
of the Companies Act 2006. The Annual Report and Financial Statements for the
year ended 30 November 2023 have not yet been delivered to the Registrar of
Companies.
The figures and financial information for the year ended 30 November 2022 have
been extracted from the published Annual Report and Financial Statements for
the year ended 30 November 2022 and do not constitute the statutory accounts
for that year. The Annual Report and Financial Statements for the year ended
30 November 2022 have been delivered to the Registrar of Companies and
included the Report of the Independent Auditors which was unqualified and did
not contain a statement under either section 498(2) or Section 498(3) of the
Companies Act 2006.
The Directors' Remuneration Report and certain other helpful shareholder
information have not been included in this announcement but will form part
of the finalised Annual Report which will be available on the Company's
website and will be sent to shareholders in February 2024.
National Storage Mechanism
A copy of the Annual Report once published will be submitted to the National
Storage Mechanism ('NSM') and will then be available for inspection
at https://data.fca.org.uk/#/nsm/nationalstoragemechanism.
Neither the contents of the Company's website nor the contents of any website
accessible from the hyperlinks on the Company's website (or any other website)
are incorporated into or form part of this announcement.
CHAIR'S STATEMENT
Dear Shareholder
I wrote my first statement to you as Chair of the Company within the half-year
report in July 2023, reflecting a challenging period for investors and the
financials sector which has continued for most of the year under review.
2023 proved to be a most frustrating year for investors in the global
financials sector. While we saw broad stock market improvements over the
period, predominantly led by technology, the financials sector underperformed,
following a few years of relative out-performance. Sentiment has not been
favourable towards the sector despite a backdrop of historically low
valuations and improving profitability at banks in particular. It seems that
rising interest rates, high inflation and the fear of a slowdown in economic
growth weighed more heavily on investors' minds.
Several US bank failures and the controversial events surrounding the
distressed Credit Suisse sale to UBS also played their part in denting
confidence in the sector. Although high interest rates are generally
favourable to the performance of banks, investors are focusing instead on the
potential for loan losses which these might cause. However, as interest rate
hikes moderate and succeed in reducing inflation to target levels, central
banks may start the process of lowering rates once more and this should act as
a catalyst to investment in the financials sector.
The highest interest rates in more than a decade have offered investors an
almost risk free safe haven in the form of government bonds and even cash,
with an appealing headline return (before the effects of inflation). This has
provided a credible alternative to equities and corporate bonds; investors
currently seem happy to wait for a better time to invest their cash.
Geopolitical risk remains high. The ongoing war in Ukraine and the
consequences of COVID continue to impact economic activity. Energy prices
remain volatile and supply chain issues persist. The opening up of China, post
the ending of zero- COVID polices, has not provided the fillip to the
investment markets expected this time last year. The troubles of the Chinese
property market and their impact on the local banking sector seem yet to be
fully realised. These factors have dampened investment and broader economic
activity. The more recent conflict within the Gaza Strip has stoked
geopolitical risk issues and raised tensions across the Middle East. None of
this is helpful in moving investor sentiment to increase risk. A speedy
resolution in the Middle East and any sign of improvement with regards to
Ukraine would be positives for investors but it is difficult to see either
development currently.
Investment Performance
The Investment Managers' Report, in the full Annual Report and Accounts, has
more detail on how the portfolio evolved over the year and the bank sub sector
issues are discussed in some detail. The MSCI ACWI Financials Index
underperformed more broadly based indices over the reporting period and the
Company's portfolio underperformed the Benchmark. Despite having respectable
returns in the first half, the Company's overweight position in US mid sized
banks meant the second half was disappointing. We avoided the big failures
(Credit Suisse, First Republic and Signature) but took a small loss on Silicon
Valley Bank; being overweight banks generally held the portfolio back. The
portfolio was modestly geared over the period under review which acted as an
additional drag on performance.
The Net Asset Value Total Return (NAV TR) for the year fell by 2.8% versus the
MSCI ACWI Financials Index which rose 0.3%. Share price performance was
further impacted by the widening of the discount to NAV to 12% in common with
the investment companies' sector in general. Investment companies with large
holdings of illiquid assets such as real estate, infrastructure and private
equity saw the biggest widening in discounts, but many investment companies
with highly liquid underlying assets were also impacted. The year-end discount
to NAV was 12.2% (2022: 7.0%), slightly below the widest discount of 13.6%
seen earlier in the year; consequently the Share Price Total Return for the
period under review fell by 7.5%.
Since launch in 2013, the NAV TR has been 119.7% against 135.6% for the
benchmark. From the point of the Company's reconstruction in April 2020, the
portfolio has returned 68.8% and the Benchmark 67.7%.
NAV Discount management
The Company continued to pursue a substantial share buyback policy during the
year which was accretive to NAV and helped support liquidity in the shares.
The Company bought back a total of 16,532,313 ordinary shares, equivalent to
5.1% of the shares in issue at the start of the financial year, at an average
discount of 10.5%. These buybacks had an accretive effect on the NAV of 0.76p
per share. Following the period end, a further 2,311,282 ordinary shares were
repurchased into treasury.
The Board issues a delegated authority to the Manager and our Corporate Broker
to buy shares under defined parameters. These are designed to ensure that the
Company does not displace any market demand for shares but provides liquidity,
if required, once market demand has been satisfied.
The Board has reconfirmed its authority to the Manager to continue the policy
of share repurchases under appropriate parameters in order to reduce the
discount at which the Company's shares trade Share Capital Changes.
Dividends
The Company's current dividend policy and aim with respect to the Ordinary
Shares is to pay two interim dividends each year, in February and August.
These interim dividends will not necessarily be of equal amounts. The Board
monitors, with the help of the Manager, the prospects for dividends from its
equity holdings and interest income from cash and fixed income securities. In
August 2023 the Company paid an interim dividend of 2.45p per ordinary share.
Despite a challenging year for markets, the portfolio has generated good
dividends and in particular collected coupons from its increased fixed
interest holdings. As a result the Company's revenue account has recovered to
pre-COVID levels. The Board has declared a further interim dividend of 2.10p
per ordinary share payable to shareholders on the register as at 2 February
2024. This will bring the total dividend paid for the financial year under
review to 4.55p per ordinary share, a modest increase on the previous
financial year.
Share Capital
While there were no share issues during the year, share buybacks totalling
16,532,313 resulted in a reduction in shares issued in the market and an
increase in shares in treasury.
As at 30 November 2023, the Company had 331,750,000 ordinary shares of 5 pence
each in issue (2022: 331,750,000 shares), of which 22,888,313 shares (2022:
6,356,000) were held in treasury. Following the period end, a further
2,311,282 ordinary shares were repurchased into treasury. Following these
share repurchases, as at 13 February 2024, the total number of ordinary shares
in issue was 331,750,000 of which 25,199,595 shares were held in treasury.
The Board
The Board is aware of the FCA's Diversity and Inclusion Policy and notes that
its current composition meets two of the three 'comply or explain' targets
with three of the four members being female and one of the two senior
positions being occupied by a female. Whilst the Board does not meet the
recommended ethnicity requirements, it has put in place a succession plan
based on the recommended nine-year tenure of Directors. A key objective for
the Board is having an appropriate blend of skills and diversity of experience
and thought around the table. When the Board next embarks upon a director
search it will set criteria, as it did in the most recent round of hiring,
that ensures candidates are sourced from a broad pool such that the Board can
consider candidates with minority ethnic backgrounds. Further information on
this can be found in the Corporate Governance Report in the full Annual Report
and Accounts.
As I mentioned in my Interim Statement, Katrina Hart and Robert Kyprianou
retired from the Board following nine years continuous service and we welcomed
Susie Arnott and Angela Henderson to the Board. There have been no other
changes to the membership of the Board during the year under review. The
Directors' biographical details are available on the Company's website and are
provided in the Annual Report and Accounts.
Environmental, Social and Governance (ESG)
The Company's investment mandate is not an ESG mandate, however the Manager
incorporates ESG considerations into its investment process and the Board has
close engagement with the Manager to monitor its progress. ESG is now formally
incorporated into the Terms of Reference of the Management Engagement
Committee. This Committee, chaired by Susie Arnott, undertook a detailed
analysis of the ESG methodology and engagement process by the investment team,
and was pleased to note year on year progress in this regard.
Beyond the investment portfolio, the Board considered the ESG aspects of the
Company. As all business operations are outsourced, the Board has limited
control over ESG deliverables, however the Manager obtains certain ESG
confirmations and attestations from suppliers annually. The Board, via the
Company Secretary and Manager, works with the Company's key service providers
to gain clear insight into their ESG strategies and believes that adopting
good ESG practices leads to better outcomes for the Company.
Management Team
The Company's portfolio is currently managed by Nick Brind and George Barrow.
As announced in early 2023, John Yakas retired on 30 June 2023 but remains
available to the team in an advisory capacity. On 1 December 2023, the team
was joined by senior fund manager, Tom Dorner, a highly experienced financials
investor.
Annual General Meeting
The Company's Annual General Meeting ("AGM") will be held at 16 Palace Street
at 2:00pm on Thursday, 18 April 2024. The notice of AGM has been provided to
Shareholders and is available on the Company's website. Detailed explanations
of the formal business and the resolutions to be proposed at the AGM are
contained within the Shareholder Information section in the full Annual Report
and in the Notice of AGM. As we have done in previous years, we will once
again upload a copy of the Manager's Investment Presentation to the Company's
website ahead of the AGM and will hold only the formal business of the meeting
in person. We have provided a zoom link in the Notice of AGM which will enable
anyone interested to view the formal business and ask questions via the
on-line chat function. The Managers will be available to answer questions and
meet shareholders present. All formal business resolutions will be voted on by
a poll and we therefore encourage shareholders to submit their votes ahead of
the meeting by proxy card which is provided with the Notice of Meeting.
We are conscious of the importance of shareholder engagement and would like to
encourage shareholders to engage with the Board and the Investment Manager. As
such, the Board invites shareholders to submit questions in writing to which
we will respond, as far as possible, ahead of the AGM date. Please send your
questions to cosec@polarcapital.co.uk with the subject heading PCFT AGM.
Outlook
Looking to the year ahead, we remain constructive on the outlook for the
Financials sector despite an uncertain backdrop. Clearly there remain
significant geopolitical issues further complicated by elections in the US and
UK, which may well weigh on the markets. However there are several signs for
optimism. Evidence suggests inflation is at last reducing, economic growth
seems to be returning to key markets and the fears of a deep recession appear
to be abating. The earnings outlook in the financial sector has improved and
valuations offer attractive entry levels for investors who are, generally
speaking, significantly underweight financial sector exposure. As and when
these positive influences take root, a recovery in investor sentiment should
follow. I encourage you to read the detailed Investment Managers report and
the Outlook section where they set out their thoughts on the various
subsectors.
Simon Cordery
Chair
15 February 2024
INVESTMENT MANAGER'S REPORT
Investment Review
Performance
Having outperformed for two consecutive years, it was disappointing but
perhaps not surprising that financials underperformed the broader equity
markets in the year to November 2023. While equity markets did deliver good
returns, this was largely due to the strong performance of technology shares,
specifically the so-called 'Magnificent Seven', (the US mega-cap technology
firms of Amazon, Apple, Alphabet, NVIDIA, Meta, Microsoft and Tesla).
The financials sector was particularly impacted by the collapse of a number of
US regional banks and, in Europe, the forced sale of Credit Suisse to UBS
Group which led to a sharp sell off in banking shares and bonds in March.
Consequently, US financials, which comprise approximately 45% of the
portfolio, were weak over the year. Conversely, Japanese and European
financials, notwithstanding the turmoil around Credit Suisse, stood out for
their positive performance. Asian financials were weaker than expected,
following the reopening of China from its zero-Covid policy which provided
less support to economic data than had been expected.
Government bond markets suffered further falls during the second half of the
year around concerns that central banks would pursue interest rate increases
aggressively to choke off inflation. These falls then reversed sharply in
November on the back of much-improved inflation data, led by lower energy and
goods prices, but also concerns that the outlook for growth was weakening.
Against this background, the Trust's net asset value fell 2.9% while the
benchmark index, the MSCI All Country World Financials Index, rose 0.3% and
the MSCI All Country World Index rose 6%. The MSCI All Country Index excluding
the performance of the Magnificent Seven would have fallen by. around 0.5%.
The Lipper open-ended peer group of financial sector equity funds fell by
-2.2%. Financial bonds performed well, returning 4.4% as per the ICE BofA
Global Financials index.
Performance in the first half of the year was largely satisfactory but the
second half was disappointing. While we had no holdings in Credit Suisse,
First Republic Bank or Signature Bank and only a very small holding in Silicon
Valley Bank (SVB) an overweight position in US banks was a headwind to
performance. Overall stock selection during the period and the negative impact
of gearing were the main drivers of underperformance.
More specifically, our bias to higher quality companies hurt performance as
they lagged peers and our overweight position in defensive names towards the
end of the year led to some underperformance on a sharp rotation and market
rally. We realised a loss on a holding in CAB Payments, a cross-border
payments company which listed in the UK in July. In our view, the company has
a significant opportunity to disrupt the existing correspondent banking model
for cross-border transfers. However, shortly after listing, the company issued
a profits warning following unexpected central bank action in a number of its
key markets. The share price fell sharply as a result. We expect it will take
some time for management to rebuild credibility given the earnings downgrade
so soon after the IPO and consequently the holding was sold after the period
end.
Sector review
Banks
In 2023, negative sentiment around the outlook for growth weighed on banks'
share prices due to concerns about the impact on their profitability from an
economic downturn. Shares initially performed well in the period as earnings
expectations continued to rise benefitting from higher interest rates which
fed through to higher net interest income - the income they generate from the
assets they hold (i.e. loans and securities), relative to what they pay out to
depositors and other sources of funding.
However, higher interest rates resulted in significant unrealised "mark to
market" losses in the securities portfolios held by banks. Despite negligible
risk of these losses being realised, if held to maturity, these losses in some
cases were substantial relative to banks' capital. Therefore, the announcement
by SVB on 8 March 2023, that it would be selling a portfolio of its securities
at a loss, while at the same time aiming to raise capital to strengthen its
balance sheet unnerved both investors and depositors. Despite support for the
capital raise, the loss of $42bn in deposits on that day led to it being
pulled and ultimately the bank's collapse.
Signature Bank was foreclosed two days later as it also suffered significant
deposit outflows. While the bank was better known as a New York commercial
real estate lender, its exposure to crypto assets via its Signet payments
platform unsettled depositors as it followed shortly after the failure of
Silvergate Bank, a much smaller bank with much larger exposure to the crypto
industry whose demise received very little coverage.
First Republic was the last of the four US banks to go into foreclosure, being
bought from the Federal Deposit Insurance Corporation by JP Morgan. In this
case, a business model focused on lending to high net worth and aspirational
clients which had seen phenomenal growth on the back of its customer service
unravelled, despite the efforts of a JP Morgan bank-led consortium to help by
injecting $30bn of deposits into the bank.
In Europe, Credit Suisse, which had seen large outflows of deposits in the
final few months of 2022, saw further outflows following the collapse of SVB.
Its 2022 Annual Report alluded to "material weakness" in its internal controls
and a poorly timed or misunderstood statement from their largest shareholder
that they would "absolutely not" put more capital into Credit Suisse knocked
sentiment further. Despite support from the Swiss National Bank and its
regulator stating the bank was solvent, it was forced into a sale to UBS
Group.
The decision by Swiss regulators to write down Credit Suisse's AT1 bondholders
to zero, which required emergency legislation, while equity investors were
not, was at odds with the established creditor hierarchy and resulted in sharp
falls in similar bonds issued by other banks. However, given the importance of
the AT1 bond market, regulators in Europe, UK, Hong Kong, Singapore and Canada
were quick to announce they would honour the creditor hierarchy leading to a
recovery in AT1 bond prices.
Not surprisingly, these events led to a sharp selloff in bank shares,
particularly in other smaller US regional banks that were seen as vulnerable
due to weaker capital. Initially actions by US authorities appeared to have
little impact due to concerns around regional banks' commercial real estate
exposure which exacerbated share price falls, but deposit flows stabilised
within a few weeks. Asian, European and other bank shares stabilised quickly,
as the issues were not seen as systemic.
In comparison, the second half of the financial year was relatively muted.
Although US banks rallied sharply in June and July, proposals from US
regulators to increase capital requirements - the so-called Basel 3 Endgame -
as well as concerns about the impact of rising government bond yields saw US
banks fall back to their May lows. Only when US Government bond yields started
to fall on softer inflation data did banks start to perform again.
European and Japanese banks performed extremely well over the remainder of the
year, the former on the back of positive earnings revisions, as analysts
factored in the impact of higher interest rates on their earnings, while the
latter performed on the expectation that the Bank of Japan would increase
interest rates from the current -0.1%, bringing an end to its negative
interest rate policy in place since 2016.
Banks' 12-month performance (2022-23)
Banks performance
Japanese Banks 38.7%
European Banks 30.3%
UK Banks 12.1%
Emerging market banks -1.4%
Indian banks -4.0%
Australian banks -5.0%
Chinese banks -10.0%
Canadian banks -10.9%
US Banks -12.4%
US regional banks -26.1%
Source: Bloomberg, 30 November 2023
Note: The figures are in sterling total return terms.
Insurance
With the events in the banking sector, news flow elsewhere came a distant
second. Unsurprisingly given its defensive characteristics, the insurance
subsector outperformed. It also benefitted from the higher interest rate
tailwinds and therefore higher investment income as well as improving
underwriting returns, i.e. higher profitability.
There was concern over the subsectors' exposure to US regional banks and
Credit Suisse, which led to some volatility. Some life assurance companies
also have high exposure to commercial real estate which came under scrutiny,
but for most of the sector, exposure was negligible or non-existent.
The implementation of IFRS 17, a new accounting standard, had a significant
impact on the European insurance sector during the latter half of the year.
While this standard has not changed the products, free cashflow yields or
dividend prospects for the sector, it has significantly altered the reporting
of results, adding yet more complexity and for many lowered reported earnings.
The reinsurance sector benefited from the withdrawal of capital by some
underwriters in 2022, reflecting the poor level of profitability over the
preceding few years. In particular, the increased cost of claims from
so-called 'secondary perils' - floods and hailstorms - as well as higher
catastrophe losses from larger events such as Hurricane Ian - which hit
Florida in September 2022, generating estimated insurance losses of around
$60bn, the second costliest hurricane on record - impacted profitability.
Consequently, with the drop in supply of capital underpinning the reinsurance
sector but with demand unchanged at best, reinsurance rates rose sharply in
January. This was estimated by the insurance broker Howden to be +37% on
average. Furthermore, the attachment points, i.e. the amount of loss borne by
an insurer before a reinsurer covers the cost, also increased. The impact is
that either insurance companies would not be able to pass on losses for less
costly events or the amount they would be able to recover would be lower.
As a result, reinsurers' share prices performed well, reflecting the much
better reward from the risks they were underwriting. Nevertheless, the
subsector did succumb to profit-taking towards the end of the period as lower
than expected inflation data led to a rotation into more cyclical stocks that
would benefit from a softer economic landing.
Diversified financials
The performance of the diversified financials sector was subdued and a
headwind to performance. This sector consists of a very wide group of
companies, including trust banks, investment banks, stock exchanges, asset
managers, information services companies, payment companies and consumer
finance companies. Despite some of the constituents of the subsector being
very defensive, it is sensitive to activity in financial markets.
Asset managers saw a wide dispersion of returns. Alternative asset managers
have performed extremely well in recent years, although some have come under
pressure over the past year due to concerns around fundraising, valuations of
their portfolio companies and the impact on performance fees from lower
returns. Overall, they outperformed, with those with higher exposure to
private credit strategies performing particularly well on the expectation that
demand for private credit will be more resilient.
Consumer finance companies also held up better than expected reflecting the
strong jobs market and household savings. Information services companies such
as S&P Global and Moody's performed well, both benefiting from a
resurgence in bond issuance which benefited their credit rating businesses.
Berkshire Hathaway also performed reasonably well, reflecting its defensive
positioning with exposure to the likes of Apple and large insurance businesses
offsetting its more economically sensitive businesses.
FinTech companies saw a mixed performance. Visa and Mastercard both performed
well, reflecting their defensive characteristics and benefiting from
resilience of consumer spending, but payment companies such as PayPal and
Adyen performed poorly over concern around margin pressure from increased
competition. At the end of May 2023, MSCI designated that payment companies
should move from the technology sector back to the financial sector and those
companies consequently now represent 10.8% of the Benchmark.
Investment Activity
At the beginning of the period, we retained a constructive view of the outlook
and despite concerns, around a potential recession, took the view that that
the sector would weather it well given resilient earnings. Nevertheless, we
reduced risk and increased our exposure to fixed income securities, while
keeping gearing at a moderate level.
Our exposure to Asia continues to focus on the faster growing economies of
India and Indonesia. While we have no exposure to Chinese state banks, in the
first few months of 2023 we increased our exposure to the region to benefit
from the reopening of China by adding to holdings in Hong Kong Clearing &
Exchanges, BOC Hong Kong, AIA Group and Prudential. However, as economic data
coming out of Asia disappointed over the course of the year, we subsequently
reduced exposure in AIA Group and Prudential and sold our holdings in Hong
Kong Clearing & Exchanges and BOC Hong Kong.
At the start of the period, we had a mid single-digit percentage exposure to
small and mid-sized US regional banks, including Cullen/Frost Bankers,
Enterprise Financial Services and East West Bancorp. This had fallen from
around a low double-digit exposure in the middle of 2022. We had been reducing
our positions due to concerns on capital, the impact of higher deposit costs
on profitability and also their higher exposure to commercial real estate,
making them more sensitive to a US recession.
We added to holdings in European banks including AIB Group and Nordea Bank
while starting new positions in BNP Paribas and Intesa Sanpaolo as we saw them
continuing to benefit from higher interest rates. New holdings were also
bought in Intermediate Capital Group and Ares Management, both alternative
asset managers that have significant private credit strategies. We continue to
believe they will be beneficiaries of the much more attractive environment for
credit strategies.
Following the collapse of SVB, we made more material changes to the portfolio,
selling our remaining holdings in small and mid-sized regional banks on the
basis that the headwinds facing US regional banks in the shorter term would
cap any rally in their shares. This was done by increasing our exposure to
larger US banks, albeit leaving the portfolio overall underweight in US banks
relative to the benchmark.
However, as valuations for US banks dropped to levels not seen since 2016 and
2020, we started to add again to specific holdings. Barclays, in a research
note, highlighted that US banks had seen the worst relative performance in
2023 versus the broader US stock market since 1937, marginally worse than
their peak-to-trough underperformance during the global financial crisis
(GFC), and their fourth worst year in absolute terms. For some quality names
this seemed nonsensical.
We purchased call options on a US regional bank ETF to participate in a
recovery in US regional bank shares. In addition we added to our holdings in
Bank of America and US Bancorp. Despite concerns over the unrealised losses in
their securities portfolio, we see both banks as conservative lenders and
valuations were attractive. We also purchased a holding in East West Bancorp,
taking our exposure back to overweight.
During the year, we started a holding in ICICI bank, a very well regarded
Indian private sector bank, offset by reducing our exposure to HDFC Bank, a
larger but equally well run peer. We also purchased holdings in American
Express and Intercontinental Exchange (ICE), which owns the New York Stock
Exchange among other businesses. ICE's shares had been lacklustre following
the announcement of its acquisition of Black Knight, a mortgage software and
data business where revenues were under pressure due to high interest rates,
but we anticipate a reversal when the interest rate cycle turns.
We added to our reinsurance exposure by starting holdings in RenaissanceRe
Holdings and Everest Group, two Bermudan reinsurance companies, partly offset
by reducing our holding in Berkshire Hathaway. We also started a holding in
Munich Re which we switched into following a sale of our holding in Hannover
Rueck as we saw it better positioned than its German peer in the current
environment. We also added to our holding in Beazley following a fall in its
share price due to confusion around how the new IFRS 17 accounting standard
had impacted its results.
Following the write down of Credit Suisse's AT1 bonds, we added to our fixed
income exposure by either adding to or starting new holdings in AT1 bonds
issued by AIB Group, BNP Paribas, CaixaBank and Banco Santander. Gearing,
which started the year at 6.0%, fluctuated between 2.6% and 8.2% finishing the
year at 6.5%.
Outlook
Bank Failures
Why did so many banks fail in quick succession when the banking sector is so
much better capitalised, with significantly greater levels of liquidity and no
signs of stress? Ultimately, the catalyst was a sharp move in interest rates
which led to significant unrealised losses in banks' securities portfolios.
This spooked the markets and led to a sharp outflow of deposits. While this
deposit outflow, is similar to what was seen during the GFC, this time around
it has not been about toxic assets on weak bank balance sheets as it was then.
The banks that failed stood out as having a high exposure to uninsured
depositors so were vulnerable to any loss of confidence. For example, the
three US banks with the largest concentration of uninsured deposits as a
percentage of total deposits were First Republic, Signature Bank and SVB, all
of which failed, with the first at 67% and the other two at close to 90%. This
compares to a median for the US banking sector of approximately 40%. First
Republic was in the strongest position of the three but that was not
sufficient to prevent a bank run.
This is not GFC II
We did not see this as another global financial crisis as the profitability of
the banking sector is vastly improved with the rise in interest rates
supporting earnings, greater capital cushions and the somewhat anaemic growth
in loan origination in recent years. Critically, outside the US, large banks
are required to hedge their interest rate risk and are penalised with higher
capital requirements if they do not do so.
The report by the Federal Reserve into SVB's failure stated: "Silicon Valley
Bank failed because of a textbook case of mismanagement by the bank. Its
senior leadership failed to manage basic interest rate and liquidity risk
and Federal Reserve supervisors failed to take forceful enough action". The
Federal Reserve went on to argue contentiously that rules around the
regulation of banks which were relaxed under the Trump administration, had
played their part in SVB's failure.
Basel 3 Endgame
While larger US banks were beneficiaries of the outflow of deposits from
smaller US regional banks in March, due to their perceived safety, they were
hit much harder by proposals dubbed "Basel 3 Endgame" which will increase
their capital requirements if implemented. While ultimately these proposals
are the final piece in the jigsaw for the post-GFC regulatory framework, they
have come under criticism not only from politicians but also regulators.
JP Morgan, one of the few banks not to report a loss in 2008 and extremely
well regarded for its risk management, is one of the hardest affected and
estimates its capital requirements will rise by around 25%. Jamie Dimon, its
Chairman and Chief Executive, has stated non-bank competitors will be "dancing
in the streets" as a consequence. We believe a more resilient and safer
banking system is a positive for bank shareholders, but the latest proposals
appear to have not been well thought through. While banks will be able to meet
the new targets with little difficulty, any easing of the proposals would be
positive.
Commercial real estate
A significant percentage of most banks' balance sheets are secured against
property, whether that be residential or commercial. Since the GFC, banks have
materially tightened their underwriting of property loans in part as a
response to new regulations. Nevertheless, in the past year investors have
been understandably concerned about their exposure to offices in particular.
As a result of the pandemic and changing work patterns, along with the rise in
bond yields, valuations for office property have fallen sharply.
Consequently, banks in recent quarters have been increasing their provisions
but as most banks' exposure to office property is limited to a low
single-digit percentage of their loan books, this should be a very manageable
issue. However, it is likely to remain a headwind for some banks' share prices
until there is greater clarity on the outlook for real estate markets, as
illustrated by the sharp fall in the share price of New York Community Bank,
even though it is seen as an outlier, due to it being forced by regulators to
raise the level of provisions it had set aside for potential defaults.
Positioning
The Trust's largest positions include holdings in JP Morgan, Mastercard and
Visa. The following gives more detail on some of the sector where we see
attractive opportunities.
Insurance
We remain positive on the outlook for the reinsurance sector where our largest
holdings are Arch Capital and RenaissanceRe Holdings. The reinsurance market
is cyclical and high returns will inevitably lead to the sector attracting new
capital which will drive down returns. However, we have yet to see it happen
in any meaningful way. Following what is known as January renewals, where a
significant number of reinsurance contracts are agreed, results would suggest
that underwriting returns, all things being equal, should continue to be
attractive.
Many industry participants believe it is the best underwriting market in over
a decade, if not longer. The biggest risk in the shorter term is an
environment where investors turn much more positive on the outlook for growth
globally. Cyclical sectors such as banks and therefore insurance stocks would
lag such a rally. However, with valuations for the sector undemanding,
arguably discounting a much worse outcome for profitability and growth, we
still see good value.
UK mid-cap financials
We added to our UK mid-cap financials during the year given attractive
valuations. While it is more understandable for those that are domestically
focused to trade on lower valuations as international investors perceive
greater risks in the UK economy than we believe is warranted, it is very
evident where companies have similarly listed peers on higher valuations.
Either these companies start delivering better returns to shareholders or are
vulnerable to being taken private.
Consequently, among others we added to holdings in Intermediate Capital Group,
as highlighted above, and started new holdings in IG Group Holdings, an online
trading company, Hiscox, the property and casualty insurance business, and
repurchased a holding in OSB Group, a UK bank focused on the buy-to-let
market. OSB Group had seen its shares fall sharply in 2022 on the back of a
profit-warning exacerbated by poor communication from management which we felt
more than discounted the downside risks.
Alternative asset managers
We continue to see longer-term opportunities in alternative asset managers,
so-called as they invest in assets such as private equity, private credit,
infrastructure and real estate. They have seen strong inflows in recent years
and with little or no pressure on fees, this has led to strong growth in
profits. This contrasts with traditional long only equity and bond asset
managers who have been losing market share to cheaper, passive funds and see
fee compression.
The added attraction of alternative asset managers is that capital is locked
up for several years, giving more certainty about future profitability.
Returns for the better performing managers have been very good. While
fundraising has been weaker in the past year, we expect them to benefit from
the improving outlook for interest rates and growth which will allow activity
in private equity markets to pick up and with that performance and flows.
Holdings we own include Ares Management, EQT and Antin Infrastructure
Partners.
Indian and Indonesian banks
We continue to see strong tailwinds for banks in certain emerging markets
where penetration of financial services and household debt-to-GDP ratios are
low. The added attraction of many banks in the region is the strength of their
deposit franchises, capital levels and profitability. However, valuations
reflect the stronger tailwinds and this is why we do not have larger holdings.
Emerging markets have materially underperformed developed markets over the
past five years. A weaker US dollar and lower bond yields historically have
been a positive for emerging markets. India and Indonesia represent our key
overweight positions there, reflecting their excellent long-term growth
prospects and the opportunity to invest in highly profitable, well-run banks
operating in a stable regulatory framework. We have holdings in HDFC Bank,
ICICI Bank, IndusInd Bank, Bank Rakyat Indonesia and Bank Central Asia among
others.
European banks
Our largest European bank holdings include BNP Paribas, AIB Group and Nordea
Bank. European banks have been pilloried for most of the past decade for their
poor performance, albeit the European Central Bank's (ECB) monetary policy
which squeezed net interest margins and their profits was a significant
contributor. When taking into account the lower risk loan books of European
banks, they have seen a significant increase in capital ratios over the past
decade, with many carrying excess capital well over levels required by
regulators.
They have benefited from the rise in interest rates but share price returns
have lagged earnings growth as investors expect the ECB to lower interest
rates at some point leading to declining net interest income. Equally, they
have come under pressure over concerns around windfall taxes and the interest
they earn on excess reserves held at the central bank. Valuations remain
extremely low on almost all metrics, especially relative to wider equity
markets.
Subordinated financial bonds
The events surrounding the Credit Suisse takeover and the regulator's decision
to allow the complete write off of the bank's AT1 debt investors while equity
investors received compensation resulted in significant volatility in the
AT1 bond market. Following assurance from other regulators to respect the
established creditor hierarchy the event was seen as idiosyncratic and the ATI
bond market rallied.
With rising interest rates globally over the past two years, the high
single-digit yields on offer across the subordinated bonds of banks and
insurance companies continue to look attractive in both absolute and relative
(to history) terms, especially when taking into account the greater resilience
of the sector.
Summary
Ultimately it is the outlook for growth and interest rates that will decide
returns over any short or medium term time period. A weaker economic outlook,
all things being equal, will lead to lower share prices and vice versa.
Financials are a play on a soft landing, as illustrated by the sharp jump in
US bank shares on the more dovish language used by Federal Reserve Chair
Jerome Powell in December when he left interest rates on hold and indicated
the era of rises was over.
Many investors had assumed central banks would err on keeping interest rates
higher for longer for fear of repeating the errors of the 1970s when the
Federal Reserve cut aggressively only to have to raise interest rates again as
inflation took hold. However, if actions follows words, a more accommodative
policy will reduce the tail risk of a sharper downturn in the shorter term.
Consequently, we are constructive on the outlook for the sector as the policy
reduces many of the concerns around the US banking system with regard to the
unrealised losses on securities portfolios and the potential for increased
loan losses.
As importantly, it should help to underpin sentiment and uncertainty around
the impact of higher interest rates on financial markets directly or
indirectly. The sector suffers swings in sentiment and at the moment is
assuming a more subdued and weaker outlook than earnings and valuations
suggest. Underlying operating performance is good and will be underpinned at
much higher levels unless interest rates return to the levels seen two plus
years ago. Consequently, we remain very constructive on the outlook for
returns from the sector over the coming year.
Nick Brind and George Barrow
Co-Managers
Polar Capital Global Financials Team
15 February 2024
Note
We would draw shareholders attention to
www.polarcapitalglobalfinancialstrust.com
(http://www.polarcapitalglobalfinancialstrust.com) for regular monthly
portfolio updates and commentary.
Full Investment Portfolio
As at 30 November 2023
Ranking Market Value % of total net assets
£'000
2023 2022 Stock Sector Country 2023 2022 2023 2022
1 (1) JP Morgan Chase Banks North America 31,432 30,627 6.4% 5.7%
2 (18) Mastercard Financial Services North America 27,136 9,805 5.6% 1.8%
3 (13) Visa Financial Services North America 21,140 11,108 4.3% 2.1%
4 (3) CHUBB Insurance Europe 19,891 22,493 4.1% 4.2%
5 (4) Berkshire Hathaway Financial Services North America 16,764 21,302 3.4% 3.9%
6 (6) Wells Fargo Banks North America 13,003 20,754 2.7% 3.8%
7 (2) Bank of America Banks North America 13,002 25,887 2.7% 4.8%
8 (15) Marsh & McLennan Insurance North America 12,308 10,041 2.5% 1.8%
9 (14) Arch Capital Insurance North America 11,356 10,533 2.3% 1.9%
10 (-) RenaissanceRe Insurance North America 11,237 - 2.3% -
Top 10 investments 177,269 36.3%
11 (47) S&P Global Financial Services North America 10,214 4,923 2.1% 0.9%
12 (21) AIB Group Banks Europe 9,511 8,949 1.9% 1.7%
13 (20) U.S. Bancorp Banks North America 8,845 8,972 1.8% 1.7%
14 (7) HSBC Holdings Banks United Kingdom 8,627 14,656 1.8% 2.7%
15 (19) Bank Rakyat Banks Asia (ex-Japan) 8,431 9,183 1.7% 1.7%
16 (-) BNP Paribas Banks Europe 8,238 - 1.7% -
17 (8) AIA Group Insurance Asia (ex-Japan) 8,177 13,874 1.7% 2.6%
18 (40) Nordea Bank Banks Europe 8,133 5,502 1.7% 1.0%
19 (-) American Express Financial Services North America 7,987 - 1.6% -
20 (34) Royal Bank of Canada Banks North America 7,820 5,858 1.6% 1.1%
Top 20 investments 263,252 53.9%
21 (-) Intesa Banks Europe 7,694 - 1.6% -
22 (5) HDFC Bank Banks Asia (ex-Japan) 7,607 21,022 1.6% 3.9%
23 (22) Beazley Insurance United Kingdom 7,422 8,909 1.5% 1.6%
24 (-) Muenchener Ruecker Insurance Europe 7,326 - 1.5% -
25 (-) Intercontinental Exchange Financial Services North America 7,271 - 1.5% -
26 (-) Grupo Financiero Banorte Banks Latin America 7,100 - 1.4% -
27 (28) Indusind Bank Banks Asia (ex-Japan) 7,055 6,898 1.4% 1.3%
28 (56) Axis Bank Banks Asia (ex-Japan) 6,876 3,789 1.4% 0.7%
29 (-) London Stock Exchange Financial Services United Kingdom 6,821 - 1.4% -
30 (-) Intermediate Capital Financial Services United Kingdom 6,676 - 1.4% -
Top 30 investments 335,100 68.6%
31 (-) BlackRock Financial Services North America 6,242 - 1.3% -
32 (54) Ares Management Financial Services North America 5,932 4,236 1.2% 0.8%
33 (27) Morgan Stanley Financial Services North America 5,565 7,558 1.1% 1.4%
34 (38) East West Bancorp Banks North America 5,496 5,660 1.1% 1.0%
35 (35) Tisco Financial Banks Asia (ex-Japan) 5,174 5,805 1.1% 1.1%
36 (46) Lancashire Insurance United Kingdom 5,007 5,024 1.0% 0.9%
37 (17) Bank Central Asia Indonesia Banks Asia (ex-Japan) 4,946 9,890 1.0% 1.8%
38 (45) Allianz Insurance Europe 4,943 5,078 1.0% 0.9%
39 (29) Intact Financial Corporation Insurance North America 4,871 6,836 1.0% 1.3%
40 (-) Bank of Cyprus Banks Europe 4,674 - 1.0% -
Top 40 investments 387,950 79.4%
41 (11) Toronto-Dominion Bank Banks North America 4,580 12,439 0.9% 2.3%
42 (-) OSB Group Financial Services United Kingdom 4,572 - 0.9% -
43 (-) ICICI Bank Banks Asia (ex-Japan) 4,363 - 0.9% -
44 (12) Sumitomo Mitsui Financial Banks Japan 4,329 11,789 0.9% 2.2%
45 (9) DBS Group Banks Asia (ex-Japan) 4,254 13,200 0.9% 2.4%
46 (-) ING Groep Banks Europe 4,225 - 0.9% -
47 (31) The Travelers Companies Insurance North America 4,216 6,484 0.9% 1.2%
48 (52) Macquarie Financial Services Asia (ex-Japan) 4,125 4,644 0.8% 0.9%
49 (66) Moneybox (unquoted) Financial Services United Kingdom 3,773 2,310 0.8% 0.4%
50 (10) PNC Financial Services Banks North America 3,740 13,112 0.8% 2.4%
Top 50 investments 430,127 88.1%
51 (30) Standard Chartered Banks United Kingdom 3,717 6,552 0.8% 1.2%
52 (41) MSCI Financial Services North America 3,707 5,497 0.8% 1.0%
53 (39) Mitsubishi UFJ Financial Group Banks Japan 3,691 5,629 0.8% 1.0%
54 (-) Everest Group Insurance North America 3,560 - 0.7% -
55 (-) Hiscox Insurance United Kingdom 3,403 - 0.7% -
56 (60) International Personal Finance 9.75% 2025 Bond Fixed Income Fixed Income 3,089 2,563 0.6% 0.5%
57 (57) Ares Capital Financial Services North America 3,067 3,393 0.6% 0.6%
58 (32) Prudential Insurance Asia (ex-Japan) 3,000 6,402 0.6% 1.2%
59 (-) IG Group Financial Services United Kingdom 2,940 - 0.6% -
60 (65) Lancashire 5.625% 2041 Bond Fixed Income Fixed Income 2,820 2,348 0.6% 0.4%
Top 60 investments 463,121 94.9%
61 (67) IG Group 3.125% 2028 Bond Fixed Income Fixed Income 2,488 2,284 0.5% 0.4%
62 (61) Rothesay Life 4.875% Perp Bond Fixed Income Fixed Income 2,487 2,548 0.5% 0.5%
63 (59) Pension Insurance 7.375% Perp Bond Fixed Income Fixed Income 2,480 2,576 0.5% 0.5%
64 (-) Antin Infrastructure Partners Financial Services Europe 2,479 - 0.5% -
65 (62) Legal General Group 5.625% Perp Bond Fixed Income Fixed Income 2,477 2,542 0.5% 0.5%
66 (63) Golub Capital Financial Services North America 2,465 2,465 0.5% 0.5%
67 (23) Citizens Financial Group Banks North America 2,385 8,570 0.5% 1.6%
68 (69) AIB Group 6.25% Perp Bond Fixed Income Fixed Income 2,347 2,056 0.5% 0.4%
69 (73) Societe Generale 5.375% Perp Bond Fixed Income Fixed Income 2,104 1,978 0.4% 0.4%
70 (64) VPC Specialty Lending Investments Fixed Income Fixed Income 2,014 2,428 0.4% 0.4%
Top 70 Investments 486,847 99.7%
71 (70) Aviva 6.875% Perp Bond Fixed Income Fixed Income 2,008 2,030 0.4% 0.4%
72 (71) Riverstone Credit Opportunities Fixed Income Fixed Income 1,939 2,026 0.4% 0.4%
73 (75) BNP Paribas 7% Perp Bond Fixed Income Fixed Income 1,762 1,867 0.4% 0.3%
74 (-) CaixaBank 8.25% Perp Bond Fixed Income Fixed Income 1,747 - 0.4% -
75 (78) Rothesay Life 6.875% Perp Bond Fixed Income Fixed Income 1,672 1,675 0.3% 0.3%
76 (72) Barclays 8.875% Perp Bond Fixed Income Fixed Income 1,562 1,978 0.3% 0.4%
77 (81) Provident Financial 8.875% 2032 Bond Fixed Income Fixed Income 1,535 1,593 0.3% 0.3%
78 (-) VEF Financial Services Europe 1,526 - 0.3% -
79 (-) Investec Fixed Income Fixed Income 1,391 - 0.3% -
80 (85) Rothesay Life 5% Perp Bond Fixed Income Fixed Income 1,386 206 0.3% 0.0%
Top 80 Investments 503,375 103.1%
81 (-) Cab Payments Financial Services United Kingdom 1,378 - 0.3% -
82 (68) Atom Bank (unquoted) Banks United Kingdom 1,281 2,241 0.3% 0.4%
83 (76) Nationwide Building Society 5.75% Perp Bond Fixed Income Fixed Income 1,258 1,785 0.3% 0.3%
84 (83) Shawbrook Group 9% 2030 Bond Fixed Income Fixed Income 1,246 480 0.3% 0.1%
85 (-) CaixaBank 5.25% Perp Bond Fixed Income Fixed Income 1,240 - 0.3% -
86 (-) Quilter 8.625% 2033 Bond Fixed Income Fixed Income 1,211 - 0.2% -
87 (-) Shawbrook Group 12.25% 2034 Bond Fixed Income Fixed Income 1,194 - 0.2% -
88 (-) Hellenic Bank 10.25% 2033 Bond Fixed Income Fixed Income 1,065 - 0.2% -
89 (82) Chesnara 4.75% 2032 Bond Fixed Income Fixed Income 1,049 1,275 0.2% 0.2%
90 (-) Litigation Capital Management Financial Services Asia (ex-Japan) 1,049 - 0.2% -
Top 90 Investments 515,346 105.6%
91 (-) Banco Bilbao Vizcaya Argentaria 8.375% Perp Bond Fixed Income Fixed Income 891 - 0.2% -
92 (-) Personal Group Insurance United Kingdom 566 - 0.1% -
93 (84) Jupiter 8.875% 2030 Bond Fixed Income Fixed Income 448 456 0.1% 0.1%
94 (-) Admiral Group 8.5% 2034 Bond Fixed Income Fixed Income 368 - 0.1% -
95 (-) RL Finance Bonds NO 6 10.125% Perp Bond Fixed Income Fixed Income 310 - 0.0% -
96 (-) Permanent TSB Group 13.25% Perp Bond Fixed Income Fixed Income 195 - 0.0% -
Total Investments 518,124 106.1%
Other net liabilities (29,926) (6.1%)
Total net assets 488,198 100.0%
Note: Figures in brackets denote comparative rankings as at 30 November 2022.
Portfolio Review
As at 30 November 2023
Geographical Exposure* Benchmark weighting 30 November 2023 30 November 2022
as at 30 November 2023**
North America 55.3% 52.2% 50.1%
Europe 15.3% 16.2% 15.5%
Asia (ex-Japan) 15.7% 13.3% 19.8%
United Kingdom 4.1% 11.6% 9.4%
Fixed Income - 9.7% 7.8%
Japan 4.3% 1.7% 3.2%
Latin America 1.6% 1.4% -
Other net liabilities - (6.1%) (5.8%)
Total 100.0% 100.0%
Sector Exposure* Benchmark weighting 30 November 2023 30 November 2022
as at 30 November 2023**
Banks 41.8% 43.3% 60.1%
Financial Servies 38.1% 31.2% 17.2%
Insurance 20.1% 21.9% 20.7%
Fixed Income - 9.7% 7.8%
Other net liabilities - (6.1%) (5.8%)
Total 100.0% 100.0%
Market Capitalisation* Benchmark weighting 30 November 2023 30 November 2022
as at 30 November 2023**
Large (>US$5bn) 99.0% 95.5% 98.7%
Medium (US$0.5bn - US$5bn) 1.0% 8.7% 5.9%
Small (