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Slowdown in directional strategies halves Man performance fees

Man Investments' asset management performance fees fell to USD 119 million from USD 236 million for the year ended 31 March 2005.

Man stated that the drop in performance fees was driven by tough trading conditions in the first half of the financial year that hurt directional strategies such as managed futures and equity long short funds.

However, Man Group said pre-tax profits for the year ended 31 March 2005 rose to USD 784 million from USD 715 million in the previous year, at the higher end of analysts' expectations. That growth also helped Man Group bolster its cash position, and net cash rose to USD 903 million from USD 602 million in the previous year.

Profits from the brokerage business, Man Financial, rose 21% to USD 145 million before tax, goodwill and amortisation, while net management fee income from Man Investments rose 35% to USD 614 million. Assets under management increased by 12% over the year to USD 43 billion, bolstered by fund sales of USD 12.1 billion, including institutional sales of USD 5.8 billion.

The group issued an upbeat statement about the coming year. Chief executive Stanley Fink said, "Since the year-end we have made continued progress in sales, with our latest Global launch raising USD 438 million of investor assets. With Asset Management and Brokerage both well placed for further growth, the Board is confident of the Group's prospects for the coming year."

Fink pointed to strong sales of Man Investments' latest global fund offering, Man AP Enhanced Series 2 Ltd, which closed in April having raised a respectable USD 438 million in investor money, and a good level of activity in the forward pipeline. He said the year had started well for both the brokerage and asset management businesses.

Man Investments' record sales last year were spread across 44 new products, with private investors accounting for 52% of sales and institutions the remaining 48%. Private investments currently accounts for about 59% of Man Investments' assets under management.

Institutional sales were predominantly Europe, while Western Europe and the Asia Pacific continued to account for the majority of private investor sales. In Asia, Japan emerged as an active region for many asset management classes, particularly among private investors and that demand is expected to continue in 2005/6.

There was also a slight change in the sales mix during the year. Institutional sales rose 57%, with RMF seeing the strongest demand. In Continental Europe, however, there was some slow-down in asset raising from private investors, in particular Switzerland, across the alternative investments industry. This appears to reflect the fact that private investors in this region are already well allocated to alternatives.

The increase in funds under management in the year from Man Investments' four global launches was USD 2.5 billion, down from USD 3.3 billion in the prior year, "partly because of lacklustre short-term performance and partly because of continued strong sales of our joint venture or 'white label' business which were up 14% at USD 2.4 billion. Particularly noteworthy were two large joint ventures in Japan which raised a total of USD 1.1 billion".

Open-ended sales accounted for USD 1.4 billion, down from USD 2.4 billion in the prior year.

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