Three offshore portfolios run by boutique asset manager Polar Capital have performed particularly well – Polar Capital Global Insurance, Polar Capital Financials Income and Polar Capital Asian Financials.
The funds are domiciled in Dublin, which means they are not household names in the UK; however, there are few onshore options available to investors who want direct exposure to the sector.
Polar Capital Global Insurance
As many managers have asserted, insurance is leading financials out of the dark days of the crisis.
The five crown-rated Polar Capital Global Insurance fund has topped the sector's charts in both the onshore and offshore universes.
The Dublin-domiciled fund has made 45.06 per cent over the last three years, outperforming similar portfolios by more than 10 percentage points.
The MSCI World Insurance index – its benchmark – gained just 22.5 per cent over the period.
Performance of fund vs index over 3yrs
Source: FE Analytics
The fund has also delivered strong performance over the longer term – more than doubling the returns of the index over 10 years and picking up more than seven times its returns over five, at 73 per cent.
It is also the least volatile of any portfolio on this list, with an annualised score of just 9.78 per cent over three years.
Alec Foster and Nick Martin head up the £319.5m fund, which is heavily invested in North America. Foster has been in charge since its launch in 1998.
The fund has a 5.9 per cent stake in Berkshire Hathaway, Warren Buffett’s investment company.
Among its other top holdings are Bermuda-based insurance and reinsurance firm Arch Capital Group, US-based investment holding company Alleghany Corporation and Finnish insurance firm Sampo.
The fund requires a minimum investment of £1,000 and has an ongoing charges fee (OCF) of 1.49 per cent.
Polar Capital Financials Income
The £58.8m Polar Capital Financials Income fund has managed to outperform the majority of its sector rivals – with the exception of Polar Capital Global Insurance – in a period when financials have been hit hard.
Over the last three years, the fund has made 33.47 per cent. It is benchmarked against the Dow Jones STOXX Financials index, for which FE Analytics does not have performance information.
However, by means of comparison, the FTSE World Financials index made just 14.08 per cent over the same period.
Since launch in October 2009, the fund has made 38.29 per cent, almost doubling the returns of the FTSE index, according to FE Analytics.
It is a mixed-asset fund, invested in both equities and bonds. Fixed interest currently has a 40.2 per cent weighting, with the rest split between equities and cash.
Manager Nick Brind has several similar holdings to the Global Insurance fund, with Finnish insurer Sampo and Bermuda-based insurer Arch Capital Group included in its top-10.
The fund is also invested in UK asset management giant Schroders, Co-Operative Bank and HSBC. The majority of the portfolio is invested in the UK, with North America its second-highest regional play.
It is yielding an attractive 5 per cent.
Polar Capital Financials Income requires a minimum investment of £1,000 and has ongoing charges of 1.55 per cent. It was launched in October 2009.
Polar Capital Asian Financials
Asian funds tend to be dominated by financials, as this sector makes up such a big part of the region’s benchmark.
While few UK managers are specialists in this area, there are a couple of offshore funds that give investors direct exposure to it.
The four crown-rated Polar Capital Asian Financials portfolio is a dominant fund in the sector, having returned 25.97 per cent over three years.
It has seen a fairly steady rise since May 2012 when the financials rally first began, picking up 30.73 per cent over that period alone.
Performance of fund since May 2012
Source: FE Analytics
The $74.2m portfolio, managed by John Yakas, is taking a strong view on India – holding 20.2 per cent in the emerging economy, followed by Indonesia and China.
More than half the portfolio is invested in banks, with Bank Rakyat Indonesia, the Bank of Central Asia and Indonesian Bank Tabungan Pensiunan Nasional [The National Savings Bank of Indonesia] among its top holdings.
It is the most volatile of all the funds in this list over three years, with an annualised score of 14.52 per cent, according to FE Analytics.
However, as a point of comparison, the FTSE All Share has an annualised volatility score of 13.2 per cent – not far below the Polar fund.
Polar Capital Asian Financials requires a minimum investment of $1,000 and has ongoing charges of 1.31 per cent.
Charles Stanley’s Rob Morgan says trends in the financial sector have played into the hands of the boutique asset manager.
"Over the last six to 12 months we’ve had a renaissance in the financial sector and a willingness from investors to embrace riskier assets, which has played into Polar’s hands," he said.
"There are very few funds operating in that space and a lot of trends very recently have been on their side."
"A lot of financial stocks produce a high level of income and that’s what investors have been wanting," he added.