Polar Capital Global Financials Trust (LSE:PCFT) fund manager Tom Dorner joined Proactive's Stephen Gunnion to discuss the outlook for global financial stocks, recent portfolio moves and the impact of AI across banking and insurance.
Dorner said higher, more normalised interest rates have supported stronger returns on equity across the sector after years of near-zero rates. During recent volatility, the trust reduced some European bank exposure and used put options for protection — but also took advantage of weakness to buy UK motor insurer Admiral and Asian banking group Standard Chartered.
On AI, Dorner pushed back against indiscriminate market reactions, arguing that banks and insurers stand to benefit from process automation and operational efficiency gains. "Financials are some of the unintended winners of some of the AI craze that we read about," he said.
The trust remains overweight European banks, pointing to stronger balance sheets, improved returns, shareholder distributions and rising M&A activity. Dorner added that the sector continues to trade at relatively undemanding valuations despite improving fundamentals.
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