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Polar position

Polar Capital Partners began just after the technology bubble burst in January 2001, set up by two of the sector’s most respected investors.

Brian Ashford-Russell and Tim Woolley were running the long-standing tech franchise at Hendersons, with the former heading the team since 1987. At the height of the bull market, they became increasingly concerned about stretched valuations and wanted to take their destiny into their own hands.

The pair left to set up Polar Cap with support from Caledonia Investments, taking the mandate for the TR technology investment trust with them and also establishing an Oeic.

Both have since stepped back from day-to-day responsibilities on the portfolios, with ex-Aberdeen manager Ben Rogoff heading the trust and Nick Evans the global technology fund. These two both boast more than a decade of experience in the sector, with the latter joining from Axa Framlington in 2007.

As the company has developed, various teams have come on board, attracted by the usual benefits of working in a boutique culture.

First up was James Salter to establish a Japanese desk, boasting near 20 years of investing for groups including Martin Currie, Schroders and Bonfield Asset Management.

Next came Philip Hardy, also from Schroders, on the UK equity side, who launched the group’s first hedge fund in 2001.

Polar Capital added a Ucits III mirror of this portfolio in June 2008, spearheading the absolute return move in the retail market alongside BlackRock and Cazenove.

Europe was the next area filled in 2003, when Robert Gurner joined from Ennismore Fund Management, and the team now runs two hedge funds – Forager and the mid- and small-cap focused Conviction.

On the emerging markets side, Samir Patel and Anton Khmelnitski came on board in 2006 to run Asia ex-Japan, Latin American and Russia portfolios.

Finally, the group also boasts a specialist healthcare team, with Daniel Mahony and Gareth Powell both joining in late 2007.

Polar Cap’s sole non- equity portfolio is the global macro hedge fund headed up by former Bank of England economist Paul Lambert. The group stresses this does not contravene its research-driven approach as Lambert is very much a bottom-up economist rather than simply following consensus views.

This research-heavy focus is the group’s overriding ethos and it has also kept the product range to relatively simple and major themes rather than over-complicating things.

That said, it has ensured products are unique enough to win marketshare in a chosen area and never offered a bog-standard long-only UK equity fund, for example.

Like most boutiques, Polar Capital believes in the primacy of investment performance for clients, closing funds where necessary to preserve absolute returns. Most of the portfolios in the range have been shut at some stage and the firm has never wanted to compromise its ideals in pursuit of excessive assets under management.

In light of this focus, the group feels justified in charging performance fees.

Looking ahead, new products are likely to be Ucits III versions of existing hedge funds, with the UK launch under Hardy proving successful last year. This will obviously depend on underlying liquidity in the asset class and a retail version of the European mid and small-cap hedge fund is therefore unlikely.

On the corporate side, the group completed an IPO in February 2007, listing on Aim.

In terms of ownership, 16 per cent of the company is now free float, with original investor Caledonia holding 16 per cent, Bermudan company XL 12 per cent and Polar Capital staff the remaining 56 per cent.

Overall, the firm runs $1.5bn across several mandates and has 47 staff, with around half working on the fund management side of the business.

The split is around 50/50 between long-only portfolios and hedge funds.

Another key element of the group is the marketing, administrative and operational support and it has always looked to keep these to the standards found in much larger organisations.

In recent years, the group has faced some criticism for its strong balance sheet, with many suggesting it could be more aggressively managed. Such comments have obviously faded away after recent market events and Polar Capital’s impending set of figures are expected to show around £40m in cash on the balance sheet.

According to the group, this shows it will not fall into the funding traps that have caught asset management firms on both sides of the Atlantic and can look through current turmoil to better times.


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