Man Group in “excellent shape” as hedge fund giant’s H1 gains send group assets soaring
Publicly-traded hedge fund giant Man Group’s funds under management have soared to a record high, powered by a mix of bumper returns across its strategies and renewed investor inflows – helping swell the London-headquartered firm’s profits during the first half of 2021.
Man’s FUM reached a record total of USD135.3 billion at the end of the June, a sharp rise from USD123.6 billion at the start of this year.
In a results statement on Wednesday, Man reported pre-tax profits of USD280 million for the first half of 2021, an eye-catching rise of more than a USD100 million compared to 2020’s full-year total of USD179 million.
Man – which runs a broad range of long/short and long-only discretionary and quantitative funds across a number of asset classes – is often considered a bellwether for the UK’s broader alternative asset management industry.
The H1 results represent a sharp turnaround for the world’s largest publicly-traded hedge fund. During the same period last year, it suffered an 8 per cent drop in FUM as a result of the initial Covid-fuelled market turmoil in March 2020.
Welcoming the “excellent growth”, Man Group CEO Luke Ellis noted that management fee profits were up 51 per cent, with total profit per share growing by 246 per cent.
“The firm’s momentum continues as we enter the second half, supported by strong performance fee optionality, a high level of client engagement and a strong sales pipeline,” Ellis said in a statement. “We remain focused on investing in our talent and technology, which are the foundations of the firm and cement our sustainable competitive advantage.”
This year’s rise was propelled by a positive investment performance of some USD9.5 billion in H1, a sharp contrast with the USD5.4 billion negative investment performance during the same period in 2020. It also drew net positive inflows of USD1.2 billion, reversing H1 2020’s net outflows of USD1.2 billion. Positive FX translation and other movements also added another USD1 billion over the six-month period.
Overall, Man’s alternative funds under management – which includes absolute return, total return and multi-manager solutions – grew USD7 billion in H1, from USD77.2 billion at the start of the year to USD84.2 billion as of June 30. This was driven by performance gains of USD3.8 billion, net inflows of USD900 million and FX and other movements of USD1.8 billion. Meanwhile, the group’s long-only FUM also increased, from USD48.6 billion to USD51.1 billion, as investment gains of USD2.9 billion outweighed USD300 million of net outflows and USD100 million of negative FX movements.
Within Man’s alternatives range, its absolute return strategies – managed under the AHL and GLG brands – now total USD38.3 billion, up from USD34 billion at the start of 2020. Total return strategies – spanning alternative risk premia, private markets, CLOs and emerging market total return funds – rose from USD29 billion to USD32.5 billion over the same six-month period. But multi-manager solutions’ FUM tumbled slightly, from USD14.2 billion to USD13.4 billion, largely as a result of investor withdrawals of USD1.1 billion, which outstripped USD400 million of performance gains.
Performance-wise, almost all the group’s absolute return hedge funds ended H1 in positive territory. AHL Diversified, the long-running systematic CTA strategy, led the pack with an 8.9 per cent rise, building on its 11 per cent annual return in 2020. The quantitative-based AHL unit also registered gains elsewhere in H1: AHL Evolution was up 7.9 per cent, AHL Dimension rose 7.0 per cent, and AHL Alpha added 6.9 per cent.
Discretionary strategies, managed under Man’s GLG brand, are also on the up. The GLG Global Credit Multi-Strategy fund rose 2.8 per cent, GLG Alpha Select Alternative advanced 1.6 per cent, and the GLG European Long/Short Fund ended H1 up 0.2 per cent.
Within the group’s total return offering, AHL TargetRisk gained 6.7 per cent and Alternative Risk Premia rose 5.9 per cent. But GLG Global Emerging Markets Debt Total Return dipped slightly into the red, sliding 0.7 per cent over the six-month period. Elsewhere, FRM Diversified II – the multi-manager offering from funds of funds mainstay Man FRM – climbed 7.2 per cent.
Ellis said: “We ended the first half having outperformed our peers by 1.3 per cent on an asset weighted basis across our strategies. This was driven by our long-only strategies which outperformed by 2.5 per cent, and alternatives which outperformed by 0.4 per cent. Overall, this translates to USD1.4 billion of outperformance for our clients.”
He pointed to ongoing engagement with clients on new mandates, with particularly strong demand for its alternative strategies. “We are pleased to have delivered positive absolute performance in all five product categories, despite the differentiated investment styles within each category.”
Looking ahead, Ellis pointed to further growth opportunities for both discretionary and systematic strategies across Asia, particularly in China, while the climate challenge continues to be a major area of focus for the group going forward.
“The momentum with which we ended the first six months of 2021 underpins our confidence for the remainder of the year,” he added. “The firm remains in excellent shape, and our focus on and investment in talent and technology continue to cement our sustainable competitive advantage.”