Man Group Plc, the world’s largest publicly traded hedge fund, is seeing demand for hedge funds from sovereign and institutional investors in the Asia-Pacific region, said Chief Executive Officer Peter Clarke.
“They are looking for a degree of capital protection,” Clarke said in an interview with Bloomberg Television in Hong Kong today. “They’re looking for liquidity in uncertain markets. And most of them have the requirements to continue to deploy assets in markets.”
About 37 percent of institutional investors in the Asia-Pacific region plan to increase allocations to hedge funds, helping expand the assets in the global industry, according to a February survey by Preqin Ltd., a London-based research firm, and the Global Absolute Return Congress, a meeting organizer.
The investors have retained interest in hedge funds even after 68 percent of them said hedge fund returns in 2011 failed to meet their expectations, according to the survey. Hedge funds globally lost on average 5 percent last year in the second-worst annual return since Chicago-based Hedge Fund Research Inc. started to track data in 1990.
More Risk Taking
Clarke said he also sees investors taking more risks, adding that equity long-short funds that bet on rising and falling stock prices will do well, he said. Credit and commodity-related strategies will also be appealing to investors, he added, without elaborating.
“This is the beginning of a significant shift from bonds into equities and other strategies,” he said.
Man Group’s assets under management rose 1.9 percent in the first two months this year to $59.5 billion, reversing last year’s decline, as investor redemptions slowed.
It raised about a quarter of its global assets from Asia as of September. In November, it appointed Li Yifei to head its Chinese office. Li worked for Viacom Inc. in China and was managing director of the entertainment company’s MTV Networks division in the country.
International hedge funds registered in Shanghai may be allowed to raise $5 billion in the Chinese currency for overseas investment, the country’s Caixin Online reported on March 1.
Europe Debt Crisis
Europe’s sovereign debt crisis led to investment losses, prompting investors to redeem from Man Group’s funds in search of safer assets last year. Analysts cut their estimates for Man Group’s 2012 earnings, concluding that the decline in assets and the investment performance of its largest hedge fund, AHL Diversified, would threaten fee revenues.
Clients withdrew a net $2.5 billion from Man Group’s funds in the fourth quarter amid concern that the European debt crisis would make it more difficult for money managers to make profits. Since the end of March 2011, assets managed by the firm have fallen 14 percent from $69.1 billion.
The company’s investment funds, which include hedge funds and the so-called long-only strategies that bet on rising asset prices, lost a net $1.5 billion in the fourth quarter.
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 Partners LP in 2010 for $1.6 billion to expand business.
Man Group announced in January a plan to trim costs by 10 percent by cutting pay and jobs.
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.
Man Group’s share price rose almost 14 percent this year.