Man Group Reverses Outflows as Quant Funds Draw Clientsby
Man Group Plc, the world’s largest publicly traded hedge fund firm, reported net inflows of $1.4 billion for the third quarter as investors backed its computer trading funds. The shares rose.
Sales of $5.7 billion offset redemptions of $4.3 billion, the London-based company said in a statement on Thursday. Assets under management fell to $76.8 billion at the end of September from $78.8 billion at the end of June.
“Despite the extreme market movements in late August impacting absolute performance across our long only strategies, we have seen good relative performance across the majority of our strategies,” Chief Executive Officer Manny Roman, 52, said in the statement. “The political uncertainties and economic upheaval in parts of the world continue to provide a very challenging market backdrop for our business.”
Lackluster returns have prompted clients to take capital out of some hedge funds and Man Group’s third-quarter gain reverses two straight quarters of net outflows. Performance fees at the company doubled in the first half to $200 million, it said in July.
“The good performance was specific to the quant areas of the group while other parts were flat,” David McCann, an analyst at Numis Securities Ltd., said by phone. “Will it be stronger going forward? That’s to be determined. These don’t always move in the same direction as other funds.”
Man Group rose as much as 4.4 percent in London trading and was up 3.9 percent at 157.1 pence as of 9:50 a.m.
The company said foreign-exchange movements had a negative impact of $600 million on assets under management. Its funds declined $2.7 billion driven by GLG’s and Numeric’s long only strategies, partially offset by a positive improvement by AHL.
Roman has added managed assets through acquisitions such as Newsmith’s equities management business, Merrill Lynch Alternative Investments and Pine Grove Asset Management since the ex-Goldman Sachs Group Inc. banker joined the firm in 2013.
Man Group issued a “cautious” outlook in August given the volatility of markets and performance in some areas, according to an analyst presentation published on its website. The firm in July reported net outflows of $2.6 billion for the first half.
“This looks a credible performance by Man during a difficult quarter,” Tom Mills and Martin Price, analysts at Credit Suisse Group AG, wrote in a note to clients. “The drive towards a more balanced business continues and good relative fund performance across multiple strategies should support that.”
Man Group has declined about 30 percent in London trading since this year’s high on April 10, compared with about a 15 percent drop in the Bloomberg Europe Banks and Financial Services Index.
“We view today’s statement positively,” RBC Capital Markets analyst Peter Lenardos wrote in a note to clients. “Man is the most inexpensive asset manager that we cover.”