Man Group Plc, the world’s largest publicly traded hedge fund, said outflows slowed and assets under management rose 1.9 percent in the first two months of 2012, stemming last year’s decline. The stock jumped the most in 15 months.
Funds increased to $59.5 billion at the end of February from $58.4 billion at the end of December, London-based Man Group said in a statement today. The increase was triggered by investment gains and a slowdown in the rate at which clients pulled money, Man Group said.
Europe’s sovereign debt crisis triggered investment losses last year and prompted client redemptions from Man Group’s funds in a search for safer assets. Analysts cut their estimates for Man Group’s 2012 earnings after concluding that the decline in assets and the investment performance of the firm’s biggest hedge fund, AHL Diversified, would threaten fees the company charges. To revive earnings, Man Group said last month it would reduce costs by 10 percent by cutting pay and jobs.
“Investor sentiment has improved compared to the last quarter of 2011 and lower redemptions have driven a significant reduction in the rate of net outflows,” Man Group Chief Executive Officer Peter Clarke said in today’s statement. “Sentiment remains fragile.”
The gap between new sales of investment products and client redemptions was “small” in January and “almost completely closed” in February, Clarke told reporters on a conference call. Man Group doesn’t disclose monthly figures on redemptions and outflows, he said.
The shares, which had slumped by 51 percent in the past 12 months, climbed 13 percent to 147.5 pence in London trading, their biggest gain since November 2010. Man Group will change its dividend policy to pay out all of its adjusted management fee earnings as a dividend. The firm expects to pay investors a dividend of 22 cents a share for 2012. The stock already offers investors the biggest dividend yield in the FTSE 100 index.
Clients withdrew a net $2.5 billion from Man Group’s funds in the fourth quarter. Since the end of March 2011, assets managed by the firm have fallen 14 percent from $69.1 billion.
The increase in assets through February was driven by gains at investment funds overseen by GLG Partners LP, the money-management firm Man Group purchased in 2010 for $1.6 billion. GLG’s European Equity Alternative fund gained 6 percent this year through Feb. 24, the Global Convertibles fund rose 8.4 percent and the Emerging Markets fund increased 6.9 percent, the company said in the statement.
AHL, a $21 billion program that uses computer algorithms to spot profitable trades in futures markets, climbed 2.5 percent this year through Feb. 27. Man Group bought GLG after investors and analysts said the company was too dependent on AHL.
Adjusted pretax profit in the nine months through December was $262 million compared with $599 million in the 12 months through March 2011. Man Group has changed its year-end reporting period to December.