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This is one of my favourite funds, not least because it is a perfect example of a diversifier, being less sensitive to macroeconomic conditions. The Global Insurance Fund is a high conviction fund investing in 30-35 underwriting companies within the international insurance sector.

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The manager, Nick Martin, has worked on the fund since 2001 when it was previously run by Hiscox, before the fund merged with Polar Capital in 2011. Reviewing his near 25 years of running the fund, he reflects that long term outcomes are less about single decisions and more about consistency, patience and avoiding costly mistakes. In this regard his philosophy closely mirrors that of the insurance underwriters in which he invests – maintaining discipline, protecting against downside risk and always insisting on a margin of safety for investors. It is probably the reason the fund has returned a compound growth rate of c.10%* pa since launch. Actually, Martin also quotes the late Charlie Munger of Berkshire Hathaway who once said, “it is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid instead of trying to be very intelligent”.

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One of the attractions of insurance is the "float" – premiums received today that will not be paid out as claims until the future. As Warren Buffett has often observed, if an insurer underwrites profitably, it is effectively paid to hold and invest this money. Today's higher bond yields (2-year US Treasury stands at over 4%),  mean that this float can now be reinvested at materially higher returns, increasing future earnings power across the sector.

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The last three years have seen good operating results for underwriters and when combined with higher bond yields, the fund manager believes that the underlying book value of his holdings should increase in the mid-teens. Fund performance, which usually tracks the book value, has risen by +13.4% ** pa over the last three years. Contributors to the fund in the first half of this year have come from the acquisition of Beazley by Zurich (now sold down by the fund) and bid rumours surrounding Hiscox.

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The insurance market remains supportive of attractive underwriting returns, with speciality and casualty markets benefiting from strong pricing, disciplined underwriting and a growing demand for increasingly complex risk.

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• FE Analytics from 16/10/1998 to 20/07/2026

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Comments from James Scott-Hopkins, Founder of EXE Capital Management.

The views are those of the author only.

The above does not constitute a recommendation to buy the fund or specific assets and guidance should be sought from your adviser as to the suitability of the fund for your portfolio. The value of investments can fall as well as rise. Past performance is no guarantee of future returns.

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