Man Group Plc (EMG), the world’s biggest publicly traded hedge fund firm, said assets under management climbed 2.7 percent since March, boosted by sales in Japan and its acquisition of GLG Partners Inc.
Funds under management increased to $71 billion today from $69.1 billion at the end of March, the London-based company said in a statement today. Sales of the Nomura Global Trend fund totalled $2 billion since Man Group opened the pool two months ago after Japan’s worst earthquake. The Man IP220 GLG fund generated $400 million of sales in April and May, the firm said.
Man Group bought GLG for $1.6 billion in October after investors questioned whether the firm was too dependent on AHL, a computer-driven trading program that once accounted for more than half of assets. The purchase helped to increase assets by 75 percent in the year. Sales in Man Group’s fiscal fourth quarter exceeded redemptions for the first time in two years.
“Momentum in terms of sales appears to be building,” Mark Williamson, a London-based analyst at Peel Hunt Ltd., wrote in a note to clients. The $2 billion of sales for the Nomura fund after “the tragic Japanese earthquake speaks volumes,” according to Williamson, who has a “buy” rating on the stock.
The shares rose as much as 5.4 percent and were up 3.2 percent, or 7.7 pence, at 246.8 pence as of 10:52 a.m. in London trading. The stock has dropped 17 percent this year, paring the firm’s market value to about 4.6 billion pounds ($7.5 billion).
Man Group today posted a smaller-than-estimated decline in full-year profit. Pretax profit from continuing operations fell to $324 million in the year through March from $541 million a year earlier, beating Man Group’s March forecast of $280 million. Sales in the fiscal fourth quarter totalled $600 million, paring total outflows for the year to $2 billion.
The Man IP220 GLG pool is the first GLG structured product Man Group has offered to investors since buying the company last year. Structured products are typically packages of derivatives based on stocks, bonds, currencies and commodities.
The integration of GLG is “going very well,” Chief Executive Officer Peter Clarke said on a conference call with reporters. “That can be measured in performance, which has been good, and it can be measured in flows, which have been good.”
Management and performance fees rose 7 percent to $599 million for the year. Net income dropped to $211 million from $445 million in the year-earlier period.
The hedge fund manager said in March full-year profit would be hurt by costs including a $375 million expense to write down the value of one of its investment businesses because of declining revenue. Man Group took the writedown because its structured-products unit switched to selling GLG investments.
AHL, which attempts to profit from trends in prices of currencies and commodities, gained 17 percent last year, according to data compiled by Bloomberg. It is down 6.7 percent this year. AHL funds on average are 12 percent below their so- called high-water marks, which is the level at which Man Group can charge investors performance fees.
So-called managed futures funds such as AHL declined when the Japanese earthquake triggered a quick shift in currency markets in March and when oil and silver prices plunged over two days earlier this month.
Clarke told reporters he doesn’t expect AHL’s losses this year will affect sales because investors know there will be periods in which it doesn’t perform.
“I don’t think performance in April in May is going to affect sales directly,” he said.
Man Group said it has $900 million of surplus capital, up 38 percent since March. The company has no plans to use those funds for acquisitions, Clarke said.
Hedge funds are private, lightly regulated pools of capital whose managers can buy or sell assets, bet on falling as well as rising asset prices and participate in profits from money invested.
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