Fund management group Polar Capital (LON:POLR), known for its flagship Technology and Health Care funds, enjoyed net inflows of £1.2 billion for the second quarter to 30 September. That took net inflows for H1 to £3.6 billion, a turnaround from net outflows of £690 million in H1 FY26.
Shares in Polar Capital dipped as investors focused on a quarter-on-quarter decline in AuM (assets under management) which led Cavendish to trim its profit forecasts. This decline mainly reflected a fall in technology valuations in July which hurt Polar’s investment performance.
Nevertheless, CEO Iain Evans insisted that: ‘Strong investment performance across several of our principal growth franchises continued to support client demand.’
£1.2 billion inflow
Specialist active asset manager Polar reported group AuM of £43.7 billion as of 30 September 2026. That was down 3% quarter-on-quarter but roughly 43% above the £30.6 billion reported at the start of the financial year.
Total AuM was boosted by Q2 net inflows of £1.2 billion, driven by positive flows into Polar’s open-ended funds and taking net inflows for H1 as a whole to £3.6 billion.
‘Strong net inflows during the quarter were more than offset by adverse market movements, with AuM approximately 3% lower than the £45 billion reported at 30 June,’ conceded Evans.
Strong demand for specialist strategies
‘Demand was strongest for our differentiated specialist strategies, led by Global Technology and Artificial Intelligence,’ enthused the CEO.
‘Healthcare, including Biotechnology, Smart Energy and several other strategies also contributed to net inflows. Client engagement remained high, particularly in Europe and Asia, while the geographic mix of new business continued to broaden.’
| AuM movement – Q2 | Open-ended funds (£m) | Investment trusts (£m) | Segregated mandates (£m) | Total (£m) |
| AuM at 1 July 26 | 34,573 | 9,594 | 826 | 44,993 |
| Net flows | 1,102 | (2) | 60 | 1,160 |
| Market movement and performance | (2,103) | (304) | (41) | (2,448) |
| Total AuM at 30 September | 33,572 | 9,288 | 845 | 43,705 |
Source: Polar Capital Holdings
Despite cutting its pre-tax profit forecasts for Polar Capital on lower AuM assumptions, Cavendish maintained its ‘buy’ rating on the stock. ‘Overall, a mixed update for Polar Capital this morning, tainted by overall lighter AuM versus our expectations,’ commented the broker.
‘That said, the strong and persistent flow momentum is highly encouraging, and we note relatively weaker investment returns followed an outstanding first quarter.’
While negative investment returns led to lighter-than-expected Q2 AuM, Polar Capital continues to deliver positive inflows in an environment where most active equity funds in the UK are suffering heavy outflows.
In fact, Polar Capital’s AuM has doubled in 18 months with exceptional investment performance, especially in its technology strategies, driving the bulk of the gains. Net flows have also made a strong contribution to AUM growth and have been particularly strong over the past three quarters.
Given the increased market volatility and economic uncertainty of the past year, investors could be forgiven for just buying index funds. But our view is savvy investors who appreciate the benefits of specialist managers such as Polar should stick with them.
We agree with Evans’ assertion that ‘specialist active managers with a clear investment edge, strong performance and exposure to long-term structural themes remain well positioned’.
