In the three months to 30 September 2019, FUM at Man Group decreased 1 per cent to USD112.7 billion driven by net outflows of USD1.1 billion (comprising sales of USD6.6 billion and redemptions of USD7.7 billion) and negative FX and other movements of USD1.3 billion, partially offset by positive investment movement of USD0.7 billion.
Absolute return FUM increased by USD0.4 billion in the quarter. Flows were broadly flat, with inflows into AHL Institutional Solutions and AHL Alpha offset by outflows from Man GLG’s equity and credit strategies. Positive investment movement of USD0.6 billion was driven by positive performance at Man AHL (Dimension +2.8 per cent, Alpha +4.1 per cent and Diversified +5.9 per cent). Negative FX and other movements of USD0.1 billion were driven by the US dollar strengthening against the Australian dollar and the euro, partially offset by positive leverage movements.
The management fee margin in this category continues to decline due to the ongoing mix shift towards institutional assets, which are at a lower margin. As at 30 September 2019: 72 per cent of Man AHL performance fee eligible FUM was at or above high watermark (USD13.3 billion of which crystallises in the second half of the year) and 20 per cent was within 5 per cent of high watermark; 36 per cent of Man GLG performance fee eligible FUM was at or above high watermark and 34 per cent was within 5 per cent of high watermark.
Total return FUM increased by USD0.4 billion during the quarter. Net flows of USD0.6 billion included inflows into diversified risk premia and TargetRisk strategies, partially offset by outflows from the EM debt total return strategy. The investment movement of USD0.3 billion was driven by positive performance in diversified risk premia and TargetRisk strategies. FX and other movements of negative USD0.5 billion were due to the US dollar strengthening against sterling and the euro.
Multi-manager solutions FUM increased to USD13.9 billion during the quarter. Net inflows of USD0.2 billion comprised flows into segregated portfolios. Positive investment performance contributed USD0.2 billion. The management fee margin in this category continues to decline due to the continued mix shift towards managed account mandates and the decline in legacy fund of fund assets.
Systematic long only FUM decreased by 5 per cent in the quarter. Net outflows of USD0.8 billion, driven by redemptions from the Small Cap and Emerging Markets Core strategies, were partially offset by subscriptions into Global Core. The outflows were at a higher margin than the average for the category and this will have a negative impact on the net management fee margin in H2 2019. Negative investment performance in Man Numeric’s emerging market strategies drove the negative USD0.4 billion of investment movement. FX movements of negative USD0.2 billion were due to the dollar strengthening against the euro.
Discretionary long only FUM decreased by USD1.4 billion in the quarter. The net outflows of USD0.9 billion were from Japanese and US equity strategies. Investment movement was flat with positive performance from Japan CoreAlpha offset by negative performance from continental Europe and emerging markets fixed income strategies. FX movements of negative USD0.5 billion were due to the dollar strengthening against sterling and the euro.
Luke Ellis, Chief Executive Officer of Man Group, says: “In the third quarter, we saw a continuation of the trends experienced in the first half of the year with strong absolute performance and inflows into our quant alternative strategies, and outflows from our long only equity strategies. FX moves were negative in the quarter, which led to an overall dip in FUM to USD112.7 billion, but year to date assets are up 4 per cent.
“As we look ahead, we are encouraged by our good performance fee earning potential, although uncertain economic conditions mean the outlook for flows remains mixed. The diversified nature of the business means that we remain well positioned and, given our continued strong cash generation, we are pleased to announce a further return of capital.”
