Polar Capital Holdings plc

Good morning and indeed good afternoon. And thank you to those of you who are joining us today to hear from Polar Capital, who announced their results earlier this morning. If you haven't seen this already, You can find a note on our website with updated forecasts. But the purpose of this afternoon is to hear from the management team and then take questions from the audience. As ever, please feel free to submit questions as we go through the presentation and we'll take as many as we can at the end. But without further ado, let me hand over to Gavin Rochester, CEO.

Hannah, thank you very, very much. And good afternoon, everybody. Thank you so much for joining us this afternoon. With me, I have Samir Ayoub. He is our CFO. And I also have with me Ian Evans, who is currently our global head of distribution. But as you may have seen, was we also put an announcement out this morning that he is my successor as chief executive. So we'll talk a bit about that later on. Once I've been through the results and some years been through the financial aspects of it. The year has been a good year for Polo Capital. I think if you compare our results to many of our peers, we've actually stood up reasonably well. Obviously, we don't want to get too overconfident, but core operating profit increased 27% for the year ended March, with operating margin increasing 29% to 32%. We had positive net inflows, albeit modest, in the 12 months in a very, very challenging environment. And our average AUM, which obviously drives revenue, was up 17%, notwithstanding the fact that our AUM point to point was marginally down. Average AUM was up. The big inflow story is that of emerging markets where we saw a lot of inflows, particularly in the first quarter of the financial year. And that team is now the third largest in terms of AUM at Polar Capital. All of this has led us to maintain our dividend at 46 PS share, the total annual dividend. And whilst the market uncertainty persists, and there is a lot of uncertainty at the moment, interest in Australia remains very strong. Ian will give more colour on that later on. Very briefly, just in terms of market perspective, I won't go too much into detail here, as you've all lived with this over the course of the year. Suffice it to say that obviously the post-year-end period, in other words, April, May and June, has been more volatile. April, particularly so given the tariff announcements on the 2nd of April. But interestingly, markets actually rebounded relatively quickly after that first shock and literally within the week. They were back to where they were prior to the announcement. So it's an interesting time. I think markets have become slightly immune to some of the negotiating tactics of the administration and seem to be taking things within their stride. Markets are currently almost at an all-time high for certain markets. Fund performance and capacity, again, very, very briefly. What that shows is the performance of all of our key strategies since inception. The bars above the horizontal line indicating the outperformance versus their respective benchmarks. Below that line is underperformance against their respective benchmarks. The color of the bar depicting first quartile dark blue, second quartile light blue. Third quartile, amber or orange. And fourth quartile is red. They are listed in sequence of inception. So on the left-hand side, those are the longest standing funds. So you can see performance numbers. longer term is far better. And some of the more recently launched funds, obviously the earlier days, they've had more challenging times. So of particular mention is Smart Energy and Smart Mobility, quite significantly below benchmark, although benchmark in this case for this chart is MSCR Acqui. So all companies world index, which is what these funds have on their fact sheets as their benchmark, In reality, these funds are measured against their peer group index, which effectively is a peer group of holdings that actually can hold in their sustainability funds. So against their peer group performing very, very well. So a slightly misleading chart in that we are obliged by compliance to reflect MSCR performance here. Next slide shows us performance in quartile ranking. Again, exceptional performance, 100% in the top two quartiles since inception. High 80s over five years. 91 and 84% May this year and last year, top two quartiles over three years. So exceptional peer group performance, although it should be noted that we are not measured only by our performance versus peer group, active peer group, but also performance against benchmark, which is what the next slide shows us. So when measured against benchmark, still very, very good long-term, but more challenging in the shorter term. This is to the end of May, so it does take into account the really, really difficult April month. We decided to show the more current performance. And of course, it's improved since then as well. So again, we'll go into more detail a bit later on, but healthcare really suffering performance in that volatile period and also in the current quarter outflows, given the sentiment that has changed for healthcare in particular. Capacity, not going to dwell on that other than it hasn't changed that much since last time I reported this. So about £66 billion of total capacity, £45 billion of remaining capacity. And not all of that capacity is sellable. Some of it is in funds that are just out of favour or underperforming. But key to this slide is there is significant capacity in four of our strategies. which actually are in inflow so global insurance healthcare international small company and emerging markets so these are four stages that had inflows in the last 12 months on that i'm going to talk a little bit about flows and ian will come back to that in his capacity as head of distribution but you can see our progression of aum an all-time high of 23.4 billion in september 21 so that just precedes the interest rate hikes and obviously the peak of inflation. And as you all know, we saw markets repress on high interest rates. Obviously, yields had a big change and we saw AUM come down and we saw outflows. So we've endured in the last three years, two of those were years of net outflow and the most recent year, was a marginal net inflow. And that was all precipitated by effectively sentiment going against equities. But AUM recovered significantly. And you can see March 24, 21.9 billion, September 24, 22.7. And at the end of June, or certainly on the 20th of June, a couple of weeks ago, 22.6 billion. So almost back to where it was at the peak. A lot of that being driven by markets as opposed to flows. That shows you, the top graph shows you what's happening in the industry. So that's global active equity funds industry-wide. So you can see in the last eight years, 17 to 24, net outflows in most of those years, 2021, which was the tail end of the whole COVID ramp up and obviously pre the interest rate changes was a marginal year of inflows globally. Polo has actually fared quite well. So bottom chart on that page, you can see in those last eight years, Polo has actually had net inflows in four of those eight years of 2025. In fact, five of those eight years, 2025 was a marginal year. inflow. You can't see it on that chart because it was quite marginal, 12.3 million of inflows on the back of significant gross inflows and gross outflows. Total net inflows, you can see that's done by a month over the year. So you can see dominated by the first quarter of the financial year and in itself dominated by emerging markets net flows. Next slide shows gross and net by strategy. So you can see emerging markets in Asia, significant inflows, international small company, which is a recent launch with promising early flows, global healthcare, insurance, Japan, marginal inflows, European small cap, small inflows. And then of course, much lesser outflows, global tech, European opportunities, North America, UK value on the right hand side. But I think interestingly on the slide, what really is actually quite important and encouraging is you see gross inflows and gross outflows. So it's not just about the outflows. Polar has done exceedingly well in terms of generating gross inflows to almost surpass in the case of global tech, and European opportunities, but also UK value almost exceeding the gross outflows. And this really comes down to managing a very large back book of mature assets where you do see general churn of the older assets under management. Calendar year to date, again, we'll turn a bit to this later on, but this is effectively showing what's happened in the last quarter. So you can see, given the volatility of the markets, given uncertainty created, certainly by the Republican administration in the last quarter on tariffs and other geopolitical tensions, we have had outflows. So again, just to be aware that it has been a more challenging quarter. I'll hand over to Samir to take us through the financial results.

Thank you, Gavin. Thank you, Hannah. So having just seen the profile of what's happening during the current quarter, we go back and just take a look through the last 12 months, the normal format of the next few slides. I'll counter through the highlights of the overall P&L. We'll explore the balance sheet and ground up with the dividend. But essentially, over the last financial year, average AU MS cap and indicator was up 17% to 22.9 billion. That's really driven the net management fee revenue line, which was up 16% in turn. And that was managed on an average net management fee yield, which was fairly consistent, 78 basis points year on year. Now, the first point of guidance for the next year that I'm looking to provide the market is over the last few years, anyone that's followed us will have heard me say to expect a net management fee yield decline of one to two basis points each year over the medium term as we look to manage the change in product mix and therefore the fees and therefore the impact on net management fee yield. That guidance still holds over the medium term. Over the next 12 months, the guidance is to expect at least two basis points to arrive to that line. And therefore the expected yield for FY26 is 76 basis points. And the reason for that is roughly half of that will be the normal product mix changes. And then the other half will be delivered by a fee renegotiation on our technology trust, Polar Capital Technology Trust, which comes into place, is effective 1st of May, 2025. So those two things combined lead us to indicate that fee yield for next year will be 76 basis points. With the higher average AUM, higher management fee income for this year, combined with managing the cost base prudently feeds through to core operating profits being up 27% year on year to just under 57 million for FY25. at an operating profit margin of 32%. And again, managing that cost base prudently provides evidence of the operational gearing that is in place. That kicks in very, very quickly if things are going in the right direction as average AUM expansion this year has proved. The cautionary note that I would say is that we're starting this financial year on a slightly lower AUM. It has bounced back through to the end of June, as Gavin said, but that average AUM has been slightly lower for this first quarter, so one to watch. Again, it isn't a linear expansion all the time, so therefore not to extrapolate for that 32% just yet for this year. The other key line, important line of our profits is delivered through performance-free profits. And again, over the last few years, you will have heard me say that the expectation should be of a low to mid single performance fee profit number to be delivered. And that is especially true, again, given over the course of this financial year, we have taken performance fee profits off our technology trust and our technology open-ended usage vehicle. So therefore, that... Average that has existed for the last three years certainly is the right average to think about as we move forward. And then the third line of profitability is other income. That is, remember, mark-to-market gains and losses on our seed portfolio net of hedging costs and interest income on bank balances. So when you pull those three lines of profit together, Adjusted total diluted EPS for the year was 53.5p, up 22%. And really that increase in earnings has allowed the board to maintain that second interim dividend at 32p, and therefore a maintained total dividend of 46p for the full year. And if we move on, please, and look at the overall cost base for the business, and really looking at the chart on the right-hand side of that slide there, The two main drivers of the overall operating costs and finance costs at roughly 147 million for the year, two things. One is with the higher profits for this year, variable staff compensation costs, which are bipartisan. for the largest component of our overall staff compensation costs, have tracked in line with those increase in profits. Remember, there is a very well-defined profit sharing or revenue sharing model in place for all of our investment teams that really drives that variable compensation line across the firm. And the other big change this year is a non-cash impairment write-off of intangibles, which I'll come back to later on. But if you X out exceptional items, non-cash exceptional items, overall operating costs have increased 11% year-on-year, which again gives you an indication of how carefully we manage the cost base over the long term. The next slide takes a look at non-staff compensation-related other operating costs. These are the costs that are slightly more fixed in nature. And again, very quickly looking at a couple of lines, we've done slightly more on the technology line, the IT spend, but mainly driven by our push in the US where we've taken on that new international small company team that arrived halfway through this financial year. And therefore, technology related spend with setting that team up. We've invested in a few back office systems to, again, put us into good stead for future growth. And again, we are spending a bit of money very carefully on AI related proof of concepts to, again, find those incremental marginal efficiencies to really drive future growth and manage the cost base over the long term and find those edges wherever we can. The other line is office space where we've done a bit more and again, very carefully tied to the push in the US where again, office space for the new international small company team and office space for the distribution team as that's expanded in the US. And again, there was a one-off refund in the prior year, which provides... the remaining balance of that year-on-year increase across that rent line. But across most of the other lines within those operating costs, we've managed to find cost savings wherever we can. And overall, other operating costs are 1% down compared to the prior year. On the right hand side, we've set out that impairment charge on intangibles. And again, it's a mix of amortization and impairment related to the Dalton intangibles that we acquired as part of that acquisition. And really that's been a mechanical exercise and looking at the discounted present value of those intangibles Given the decline in AUM faced by the Melchior European Opportunities team in that space, and that's the team behind those intangibles, they've been in an incredibly difficult space over the last couple of years, European equities, but also especially European SMID equities. That decrease in AUM has really driven the mechanical accounting calculation for that impairment charge. Again, a reminder that it is a non-cash exceptional item is the way that we've treated it. And that write-off does not impact the cash flows for the business in this financial year. And if we move on, then we look at the first of our two slides on the balance sheet. The first slide, total cash and seed investments of roughly 160 odd million. At the end of the financial year, the change in the seed portfolio has really been the international small company team coming online through the year and that fund being seeded. And again, as we allude to in the presentation further on, that team is now above 100 odd million US dollars. So that's been really, really pleasing to note over that short period that that team's been going. On the next slide, we look at capital from a slightly different perspective. We look at excess over regulatory capital, and that surplus position is roughly 65 million over our REG requirement of 26 million, which is held flat year on year. And really the other key thing that I draw your attention to is for the last number of years, we've very clearly laid out our thinking and our framework for use of capital. Again, those four principles remain intact, seeding new product ideas for new teams and product extensions for existing teams. That really forms the R&D side of our thinking and our business. We will look to continue to maintain a strong balance sheet as much as possible, both for future growth, but also to ride out challenging periods that we've seen over the last couple of years. We will continue to return capital through ordinary dividends, and then we will also look to do share buybacks. Historically, we've done them through the EBT, and historically, we've done them to mitigate existing equity incentive plans. But as you move forward and move to the next slide, again, pulling everything together, increased earnings for this financial year, strong balance sheet, and therefore with those enhanced earnings, the board were able to maintain that second interim dividend, as I said, and therefore the full interim dividend at 46P for this financial year. And that equates to a payout ratio of 86% of total adjusted earnings for this year. Our longstanding policy remains intact, range of 55 to 85% of adjusted total earnings. And again, I'm sure the question will arrive, so I will try and explain that, but very happy to pick up the conversation again later on. As we look to dividends for FY26, the key decision point really, the next decision point is in November when we come out with our interim results. And the way we will look at this and approach this is to look at earnings for the year as they evolve over the financial year. We will look at the outlook and the market conditions that surround the business over a short and medium-term view. And again, we will look at our balance sheet strength and see how best to deploy that within the framework of capital allocation, as I've explained, that we've sort of had in place for a number of years. In terms of sensitivity and stress testing, you will have heard me say before, every 1p of dividend that the board declares and that we pay out equates to roughly 1 million pounds of outlay for the business. So that gives you some sense of the strength of the balance sheet and how that could be deployed and to what extent we might feel comfortable deploying that. With that, I will pause and hand back over to Gavin for strategy and outlook.

Thank you, Samir. So just looking at the strategy, and you will all recall, the strategy has been growth with diversification, so both not just growth for growth's sake, but diversification, and rather satisfactory diversification and distribution footprint. So you can see almost 40% of total clients are now non-UK customers. essentially predominantly Europe, 33% of European clients through seven principal or key European markets. So really, really good progress in terms of diversifying the distribution footprint and more of that from Ian a bit later on. The next slide just shows you year on year in chronological sequence, which funds we've invested launched and which ones we've closed down. So clearly, not everything works. And we'll be the first ones to admit that not all funds are a success. And key for us is making sure there's housekeeping. So to make sure that we're actually closing those that actually struggle to perform, close them down. and free up operational and distribution capacity for those that actually do well. International Small Company Fund on the next slide. Again, we mentioned this is the half year. This team was launched in September, 2024 in mutual fund format. So this is specifically for the US investor base. So this is as we try and really, really focus on growing our US client base and a very, very, very promising start to AUM growth in the first nine months of this fund post-launch. So they are now through $100 million in terms of AUM and a strong interest of pipeline going forward. Team based in Tampa, Florida, and primarily focused on managing Acqui ex-US. So this is all companies world ex-US equities, mainly for the US investor market. The next one is obviously the flow story for the year, and we've had material inflows achieved by the Emerging Markets and Asia team during the year. This fund was launched in the summer of 2018, and it's now growing to be the third largest team by AUM at Polo Capital. There's a strong pipeline of interest for this going forward. The other one of point for note is obviously the Artificial Intelligence Fund, which was launched in October 2017. On the next slide. And what this does is it shows significant strength and appetite for this AR fund. And just to remind you all, this is not a pure tech fund. This is a global equity fund measured against MSCR ACWI. But essentially what it's doing is looking to invest in AR beneficiaries. So essentially what they're doing is avoiding those companies that are disrupted by AR, but actually investing in those that are beneficiaries in terms of production efficiency, business efficiency, margin expansion, and obviously profit improvement, and therefore share price improvement. So it's been an inflow, certainly over the last year, and it's currently an inflow. So a really compelling story managed by our core technology team, the largest team at Polo Capital. Over the page onto the next slide, again, just to mention one of our smaller funds, but it's an alternative fund which provides diversification for the business. And this is managed by our convertible bond team. It's an absolute return objective and it's an absolute outstanding performance. It's never, ever had a calendar year of making a loss. Its best calendar year return was 22.9%. Its worst year was 0.39%. It's 2024 return 9% and 2025 year to date 4.5% absent return. So again, a fund based on its performance and track record is currently receiving net inflows. And then finally, Just to talk a little bit about third party recognition, which is important, bearing in mind our key client base are intermediaries. So there are five key awards we've received during the period under review. Of note is the Morningstar Award for Investing Excellence. So we're particularly pleased with that one with the Belgium winner and shortlisted in Spain and the UK. So always very, very good. to get third party recognition and also for clients to see that. And then I'll turn to the next slide, which is important, in that it was announced this morning that I will be stepping down and retiring as chief executive after eight years. The board conducted a comprehensive global search. They did interview very, very good, credible candidates from around the globe and decided that for Polar Capital, Ian Evans, who's currently global head of distribution, would be CEO designate. I'll formally hand over in September 25 at the at the AGM and Ian takes over. He has 30 years of experience in the industry and two decades of experience at Polar Capital and has been responsible for the phenomenal progress. success in the distribution and diversification of the distribution footprint. So on that note, what I'm very comfortable doing is letting Ian say a few words to you. And also, if you do want to ask Ian questions, following that, what I will do is get back to the summary and outlook.

Ian, over to you. Thank you, Gavin. Thank you, Anna. It goes without saying, I'm delighted to be stepping into the role and honoured after 20 years at the firm. Over that 20-year period, I've seen the company grow, both in size and geographical reach, but it's not been a straight line up. We've had challenging times and easier times but I think you know what sets us apart is that we are differentiated in what we're doing or what we do and over the last 20 years you know we have focused been wholly committed to active management as Gavin went through one of the earlier slides you know it's been a challenging period for active fund managers over the last eight years last year was particularly challenging with record outflows and as a business we've held up well In that context, I think if we continue to focus on what differentiates us, elevate what we already do well, and look to improve wherever we can, then we can continue to succeed, you know, in spite of a challenging environment.

Ian, thank you. I mean, what I'll do, just note the time. We're half an hour in and I'm aware that some of you have other things to get on to. But just to summarise then, strong balance sheet has enabled a maintained and covered dividend. Very, very important. It is covered. AUM has recovered very, very quickly after recent volatility in the current quarter. There's growing interest in our U.S. domiciled mutual fund range, in particular, International Small Company Fund. And also key, some of you will be aware, is that we've just completed the corporate event for the Financials Trust, where we did go through a tender offer. And that trust now has 350 million pounds in assets, providing a good platform for growth going forward. The last time this fund went through a tender offer was in COVID in 2020. And this fund went to 600 million or 612, in fact, in total, from a base of 100 million in 2020. And also we've announced CEO succession. When I joined Polar in 2017, eight years ago, I did say it was a five to seven year plan for me. So I'm delighted to have had a most enjoyable eight years. It has had its challenges. It's had its fantastic moments as well. And I'm very pleased to be handing over to Ian. On that note, very, very happy to field any questions.

Super. Thank you very much. How much exposure to local government clients does Polar have? And what is your view on the prospects for the business on local government pension schemes going forward?

Well, the short answer to that question is at the moment we don't have any exposure, although historically we have, I can think on two occasions, most recently pitched for a UK mandate. One of the challenges there, I think, for us as a specialist firm is they do run their portfolios to very, very tight costs. Although, interestingly, I attended the Investment Association annual conference last week where there was a very good session on LGPS and there was a representative there and they were saying that they are looking to focus more towards value actually than purely on cost. And that's a change of mindset actually for the pension fund industry. So yes, that currently no exposure.

Thank you. Could you give a bit more detail on the 13 million impairment, please?

So that impairment, Hannah, was... is reflective of the intangible assets that were on the balance sheet as part of the Dalton acquisition. That was a transaction that happened in, completed in early 2021. And really the main vehicle within the sort of Dalton acquisition was a European opportunities fund and a fund that is biased towards small and mid-cap European equities. Now, as we've gone through 2020, the initial... betting in of the team and that business happened very, very well. But what we couldn't have foreseen was obviously the Russian invasion of Ukraine and the impact that had on the appetite for European equities in general. but also the impact of interest rates, et cetera, on small and mid-cap equities. So effectively over the last three odd years, those have been really tremendous headwinds that that fund and that team has really struggled against. Performance has not been able to withstand either. And the net result is AUM of a billion of when that transaction completed is now close to 200 odd million. Those are the facts. And from an accounting perspective, when we run the discounted present value of the intangibles versus future cash flows, the simple mechanical accounting exercises, those intangible assets, it is very difficult to hold them on our balance sheet. And therefore, remember half of that, roughly half of that impairment, roughly five and a half million was written off at the interim stage. And the remainder totaling up to that 13.6 million is written off at the end of March when we rerun the calculation. And the accounting exercise leads us down to a stage where that needs to be written off. Having done the exercise, there are no longer any intangible assets on the balance sheet. And we move forward and navigate the environment with that team on a forward-looking basis. The team is still there. There are clients still invested. And we progress from the point here on forward.

Well, that leads me quite nicely on to the next question. What are Ian's views on acquisitions, given that the last two haven't necessarily been a success the team would have hoped for?

I mean, I think open minded is the answer to the question, Hannah. Despite, you know, those those two more recent challenges, because in our history, we did an acquisition back in 2010 of HIM Capital. which was a financial specialist business. And, you know, that was very successful. One of our most successful funds, Global Insurance Fund, which is north of 2 billion in assets. When we acquired that business, it was 60 million. So I think, you know, yeah, open-minded business.

Thank you. A couple of questions on strategies. One, what is the top of your wish list for new funds and where do you see the gaps? And the other one was, do you have a fund that's main focus is in infrastructure projects, investments, either in the UK or globally?

I'll take this one, Ian. Okay. So I think top of the wishlist at the moment is an all-cap international fund. So this is a strategy which we'd like to launch for the U.S. client base. So this will be a mutual fund format and obviously also segregated accounts, if appropriate, but essentially Acqui ex-U.S., but all-cap. The current team in Tampa, Florida, is smaller companies. And we are aggressively interviewing teams and looking. And that's effectively to fulfill our desire to grow the U.S. client base quite significantly. And this is specifically for U.S. investors. There is a lot of anecdotal evidence at this stage, and I think it's coming through more empirically now as well, Ian, in that U.S. investors are increasingly looking at non-U.S. equity exposure. as an investment destination going forward. So Europe so far has probably seen passive flows from US investors, not active equity flows, but we're counting on international or IFA mandates as being the place to be in the next decade.

Second question, Hannah, just remind me, that was... That was on infrastructure. And do you have any where that's the main focus, either UK or globally?

No, the answer is no. We have had a look at the past in the past at dedicated thematic infrastructure teams for a number of reasons. We've always walked away from them. But no, I mean, our individual funds will have exposure to certain infrastructure companies, but they're not dedicated.

Picking up on your comments there about the US, if the big opportunity is winning new flows in the US, can you give more color on what you're doing to grow these and your success so far?

Yeah, thank you. So we've been building our distribution team capability in the US. So we now have a team of five covering the US market. Their initial focus is on the wholesale channels, really mirroring the successes we've had both in the UK and growing the business in Europe. So we're taking that same pattern across to the US. We have now three mutual fund products, So the team is able to market those freely to US investors. They can also market our other existing strategies, but as strategies, so they could be launched as separate managed accounts. So we'll look to, as Gavin said, as a priority to add international all-cap. And once we add an international all-cap fund, we will likely look to bolster the team further, not hugely, but by another two or three individuals, probably taking that team to eight.

Okay, thank you. Sticking to the US, with Trump at the helm, are you seeing a move away from US equities by global institutional investors?

Certainly lots of talk about it. So I think, yes, it's the short answer. So when I was in New York in March, the tone had definitely changed from the same conference a year earlier. So U.S. investors in particular are looking overseas. Last year, basically the focus was almost exclusively on US equity, domestic equity. Now more than half of that same audience were looking beyond their own shores and overseas. So I would hope In the next three to six months, we'll actually start to see that bearing fruit. But as Gavin said, much of what's happened to date, and we can see it in European equities, has come via passives this far. But I think that's really a reflection of investors viewing at least the initial move as tactical. Once that becomes a structural portfolio position, then I think active managers can benefit.

Okay. And there's just another question popped up on that. These flows are moving more towards UK and Europe as opposed to emerging markets, Asia, etc.

So far, yes.

Thank you. Let's have a look. What was the reason for removing performance fees from the tech trust? It doesn't seem particularly supportive of active management versus passive.

Yeah, I mean, I think in many ways, Hannah, we recognize that the pressure that active managers are under in the retail space and in the wholesale space, for many investors, actually, performance fees present a challenge because... Many of our wholesale investors are managing to very tight investment budgets and in terms of the overall cost of their portfolios. And they increasingly struggle with the variability of performance fees. So I think what we're seeing is in that wholesale channel. a move away from performance fees, but actually in the segregated account and institutional channel, perhaps the opposite happening. So, you know, when we're pricing for separately managed accounts, quite often we're offering up both a performance fee based fee structure and a performance fee free structure and offering the choice. And I think actually that's where we'll see performance fees more prevalent going forward and less prevalent in the retail wholesale channels.

Okay, thank you. Investment trusts have well-known advantages for active managers NAV performance. Obviously, it's not a good time to consider new investment trust issuance, but are there not good opportunities for your teams to assume management of established funds with unhappy shareholders?

Ian, shall I have a go at that? Because yes, it's an area we've looked at very, very closely. I mean, we We run three fairly large, in comparison to others, investment trusts. Tech, as many of our investors know, is a FTSE 100 company. It's really successful, very large. It doesn't face the same, threats that some of the smaller ones face from activism. I think that's fair to say. But we have looked at a large number, I have to say, over the last couple of years of investment trusts that have been either trading at a significant discount or underperforming or just subscale because an investment trust needs to have a certain size to make its costs worthwhile. The challenge for Polar, though, is obviously Our teams run open-ended vehicles as well alongside the trusts. And often the team won't want to give up valuable capacity for another trust of possibly a subscale size. So often that's a stumbling block. The other stumbling block often is fees because the investment trust boards effectively have two levers. One is fees and the other one is trying to outsource the management to a more effective manager. And, you know, when we get approached or when we approach a board and they say, well, actually, the current fees are X, but we actually want to pay X minus 30 percent. We have to think long and hard about that, because essentially what that means is we're giving up really valuable capacity on highly specialist teams. And their answer is just, well, no, why should we do this? So it's an obvious question. It's a very good question, but there's no real obvious answer for it at Polar.

Helpful, thank you. An investor here perhaps looking for a few ideas. Can you give a few examples of what is in the Smart Energy Fund?

Oh, that's a good question.

Directing towards the fun fact sheet.

Yeah, and I think it's very simplistically, it's all things alternative energy, you know, and that from solar to wind energy to, yeah, battery power,

And they look at the entire ecosystem. So they try and again, without going into individual names, but they steer clear away from energy producers. So they're underweight, but they look at the process of electrification, et cetera, and the conversion to renewable energy and either the technology companies or the beneficiaries that play a role in that process rather than focusing on producers.

I mean, what they do very effectively, Hannah, is, as Samir said, is they focus on very specific verticals within the energy renewable space. At the moment, production isn't too weight, but they'll look at distribution. So energy distribution, energy storage is another key area. At the moment, they are very, very big on energy efficiency. So how do you get more efficiency out of energy? And particularly big data warehouses which produce energy which actually use a lot of energy, massive energy. So how do you get more efficiency out of these big data warehouses and data centers that are being put up? So that's what the team are focusing on.

Okay, we've talked about the heat going out of the US potentially. So perhaps this question is directed there. How much of Group AUM does NVIDIA account for?

Oh, I mean, we will be underweight, I would say. I mean, it's a question that sort of the answer to the question changes every day because the teams will actually alter their holding. NVIDIA is over 10%, I think, currently of the index. And in our usage funds, we can't hold more than 10% of one single stock position. So essentially, I think that the broad answer to that is we are underweight. and could be underway at any particular time because of usage rules. That isn't the case, I think, within the investment trust, Ian. I think slightly different rules apply there. And certainly segregated mandates, we don't have that same restriction.

Okay, thank you. Are you looking at active ETFs?

I'll direct that to Ian because Ian's team in the US has been looking at this.

Yeah, we have, Anna. So we've looked in some detail in the US and spoken to distributors, administrators. So it is something we're considering. The challenge for us, I think, as specialist active managers is if you are, if your underlying portfolio is 100%. US equity, then you can be non-transparent. You don't have to disclose your underlying holdings on a regular basis. However, if you invest overseas and all of our portfolios are international, then you have to give full transparency on a daily basis. And as you might imagine, many of our portfolio managers are very sensitive about that because that is effectively their IP.

Yeah, no. Thank you. Second to last question, I think. And I think this is trying to get a little bit of an understanding of whether you are aware of any successful or challenged exemption claims when it comes to holding POLA in a IHT portfolio.

Unfortunately, we're not aware of any successful claims. And again, this is an area where I think the ultimate judge and jury are HMRC and they deal with these things on a case-by-case basis. There's obviously the default guidance out there. But again, the intricacies of each company are very, very different. We're not in a position to put out how Polar might sit within individual portfolios. We are aware that a number of people do hold us with a view to planning, but that must be done on a case-by-case basis, unfortunately.

Thank you. And finally, with a new CEO, I assume the board's aspiration to reach 30 billion AUM in the medium term hasn't changed.

You'd have to cover that because essentially that was something we all said as an executive team, what, a year ago?

Yeah. Yeah, and I think that remains, that remains a realistic aspiration, despite the external challenges.

Super. Well, that just leads me to, well, bid you farewell, Gavin, and an enjoyable retirement. Thank you. And our audience for joining us. And Samir and Ian, we look forward to hearing from you both in another six months time. Congratulations, Ian.

Thank you, Anna. Thank you, Anna. Thank you. Thank you, everyone, for your support.