Despite the turmoil in global financial markets, demand for Man Group’s hedge fund products has remained very strong, the firm says in its latest half-yearly report, with sales in the six
Despite the turmoil in global financial markets, demand for Man Group’s hedge fund products has remained very strong, the firm says in its latest half-yearly report, with sales in the six months to September 30 estimated to be around USD10bn, 25 per cent higher than for the same period of 2007.
Private investor and institutional redemption rates have remained low, in line with last year’s levels, giving Man estimated net inflows for the period of USD4.1bn, up 14 per cent.
However, the firm says, turbulent markets have adversely impacted performance across all asset classes. While the bulk of Man’s product range has performed as well as or better than its benchmarks so far this year, negative investment returns has reduced funds under management in the period by USD5bn.
Man says active risk management in its core funds during periods of high market volatility has reduced investment exposure. Together with the impact of the strengthening dollar, these moves have helped to reduce funds under management to an estimated USD70.3bn, down 6 per cent since the end of March.
Gross management fee income for the six-month period is estimated to be more than 10 per cent higher than the USD983 million recorded in the same period of 2007, while net management fee income will be in line with the equivalent period, principally reflecting a lower level of net finance income but also continued investment in infrastructure and people. Net performance fee income will be around 40 per cent lower than the comparable period last year, primarily as a result of a lower contribution from AHL.
The group continues to hold excess regulatory capital of about USD1.5bn. During the first half, USD674 million of cash was returned to shareholders through a combination of the final dividend (USD423 million) and share repurchases (USD251 million).
‘At times of market stress our conservative product range, with its focus on investment styles with low correlation to equity and bond markets, has particular appeal to investors,’ says group chief executive Peter Clarke.
‘Strong sales across this period of extraordinary market turbulence demonstrate the value of our investment approach and the power of our wide-reaching sales network. With surplus capital and a continued commitment to invest in people, products and innovation, we are very strongly positioned for the future.’
Estimated sales for the six months to September of USD10bn compare with USD5bn in the first quarter. Private investor sales were USD7bn, of which guaranteed products accounted for USD3.7bn and open-ended products USD3.3bn, while institutional sales were USD3bn. Redemptions for the six-months period were USD5.9bn, including USD3bn from private investors.
At an estimated USD70.3bn, funds under management are estimated to be down from USD74.6bn at the end of March. The split of funds under management is private investors USD41.7bn, down from USD43.5bn in March, and institutions USD28.6bn, down from USD31.1bn.
Up to September 24, AHL’s performance is estimated to be up 0.9 per cent, while up to the end of August Glenwood was down 5.8 per cent, Man Global Strategies down 10.8 per cent and RMF down 2.5 per cent.
Man, which traces its origins back to a brokerage founded in 1783, is today an alternative investment management business with some USD70bn in assets in funds for institutional and private investors and employs 1,700 people in 13 countries.
