* Assets under management $4.28 bln at end-Nov
* H1 profit before adjustments 4.8 mln stg vs 2.3 mln stg a
* Interim dividend 1.5 pence
* Says macroeconomic conditions to limit industry flows
* Hedge funds still suffering outflows
By Laurence Fletcher
LONDON, Dec 9 Polar Capital
posted a 9 percent rise in assets over the past two months, as
sales of strongly performing mutual funds helped it buck an
industry trend of losing clients during the euro zone debt
The British-based fund firm, which manages a combination of
long-only and hedge funds, said assets under management at
end-November had grown to $4.28 billion, helped by bets on
rebounding markets and sales of its Japan, North America and
Adjusted profits more than doubled to 4.8 million pounds
($7.5 million) for the six months to end-September, up from 2.3
million pounds a year ago.
"Whilst this was a good performance, the key period for
Polar, as always, remains the second half," said Peel Hunt
analyst Stuart Duncan, referring to the period when Polar
calculates most of its performance fees.
"Polar has gone from being one of the cheapest stocks in the
sector to being one of (the) more highly valued," added Stuart,
who has cut his investment recommendation to "hold" from "buy".
At 0930 GMT Polar Capital's shares, which traded below 130
pence in March, were unchanged at 203 pence.
Mutual fund sales have been helped by interest from some
high-end financial advisers and funds of funds, who have begun
buying into long-only funds in the belief equities are now
cheap, said Chief Executive Tim Woolley.
"If you think that (the euro zone crisis) can muddle through
then equities are probably an interesting bet to make. Some
people are brave enough to see it as an opportunity," he told
Reuters in an interview.
However, he warned that the euro zone's debt crisis could
limit flows across the industry.
"It's a very uncertain environment, which is clearly having
an impact on clients. I wouldn't extrapolate (from these
figures) unless things improve."
HEDGE FUND OUTFLOWS
Over the six months to end-September, the firm booked $706
million of net sales of its mutual funds.
The firm's European Conviction fund is up 5.9 percent in
performance terms from the start of the year to Oct. 28, while
its Global Insurance fund is down 1.7 percent and its Japan fund
has fallen 1.9 percent, both ahead of their benchmark indexes.
In contrast, many fund managers are now seeing outflows.
Earlier this week Aberdeen Asset Management said clients
withdrew 900 million pounds in September.
And last month fund firm Henderson said assets fell
by 9 billion pounds in the three months to September as the euro
zone crisis spooked clients into withdrawing more money than
analysts had expected.
However, Polar's hedge funds saw a net $73 million outflow,
driven by its UK fund, which is down around 12 percent this year
in performance terms.
"The hedge fund environment in regard to net flows has been
pretty tough," he said. "We hope we've reached a nadir in terms
of net outflows."
He added that the firm's European long-short funds had
profited this year from stockpicking rather than bets on the
overall direction of the market.