Man Group Assets Shrink in Second Quarter on Investment Losses

  • Assets fell to $76.4 billion from $78.6 billion in quarter
  • London-based hedge fund says outlook remains uncertain

Man Group Plc, the world’s largest publicly traded hedge-fund firm, said its assets dropped in the second quarter as investment losses totalled $1.5 billion. The shares fell as much as 4.3 percent.

Funds under management declined to $76.4 billion from $78.6 billion three months earlier, Man Group said in a statement on Tuesday. There were net inflows of $500 million in the second quarter as investors put money into its funds despite a mixed performance in volatile markets. The London-based firm last week announced that Chief Executive Officer Emmanuel “Manny” Roman will leave at the end of next month.

Man Group’s performance-based decline in the second quarter came during the worst opening six months for European hedge funds in 16 years, according to EurekaHedge. Money managers averaged losses of 3 percent in the first half, the Hong Kong-based research firm said.

"There remain many near-term uncertainties at Man and we still see no good reason for any investor to buy the shares," said David McCann, an analyst at Numis Securities Ltd. in London with a hold rating on the stock.

Man Group was down 3 percent at 118.70 pence at 9:32 a.m. in London. The shares have declined about 32 percent this year.

Adjusted pretax profit fell 65 percent to $98 million in the first six months from a year earlier. Man Group said the reduction was because of a drop in gross performance fees.

‘Challenging Period’

“The first half of 2016 has been a particularly challenging period for the global investment management industry" and the outlook remains uncertain, Roman said in the statement. Man Group President Luke Ellis will replace him as chief executive officer on Sept. 1. Roman will take up the same role at Pacific Investment Management Co. on Nov. 1.

After a positive performance in the first quarter, the firm’s AHL range of computer-driven hedge funds lost money in the second quarter, with the $4 billion Diversified Fund losing 6 percent. Half of Man Group’s 12 alternative funds within its human-managed GLG unit lost money in the period.

Roman is leaving Man Group after more than three years as chief executive officer. His successor, Ellis, is currently responsible for managing Man Group’s four investment units, AHL, GLG, Numeric and FRM, the firm said in a statement last week.

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