When markets tumble, banks and financials tend to be close behind. But did were any managers with this particular focus able to navigate 2011 and come out in positive territory?
According to Citywire Global analysis, the average manager in the 37-strong sector lost 14.74% over the year ending January 2012. This is while the MSCI World/Financials TR benchmark fell 14.4%.
So, did anyone end up in the black from betting on banks? In total only three managers managed to end the year in positive territory.
Leading the way is a pair of Euro Stars A-rated managers, Alec Foster and Nick Martin of Polar Capital. They have been co-managing the €389 million Polar Capital Global Insurance fund since joining from Hiscox Insurance in September 2010.
Over the past 12 months they have returned 4.96% by largely betting on North American opportunities and limiting their exposure to Europe. The US represents nearly 50% of the fund, while Europe equates to only 10% of their overall exposure.
The fund is largely centred on investing in large-cap names, which account for nearly 60% of the fund. The majority of these are in commercial finance (43%) and the reinsurance sector, which makes up 26.5% of the portfolio’s sector exposure.
Looking at the top 10 holdings, Foster and Martin have large positions in Bermuda-based insurers Arch Capital Group, global insurance firm ACE Group and Warren Buffet’s multinational conglomerate Berkshire Hathaway. These stocks represent nearly 20% of the overall portfolio.
Kooyman – who is profiled in the March issue of Citywire Global magazine – is largely focused on Asia, which makes up nearly 40% of the fund, and in December he increased his exposure to India.
He currently operates with no exposure to European or UK financials and in a market update last month, Kooyman said Europe will not be a good bet until meaningful austerity measures are pushed through by governments in the region.
Banks make up 45% of his portfolio, while he has positioned himself to catch a rally in catastrophe reinsurance firms, such as Scor and Amlin.