Man Group Sails On from Summer Squalls |
Date: Wednesday, September 26, 2007
Author: Bill McIntosh, Senior Financial Correspondent, Hedgeworld.com
LONDON (HedgeWorld.com)—Man Group plc has emerged with little visible harm from the summer turbulence that damaged a number of hedge fund operators and dented several big quantitative funds in particular. In a pre-close trading statement, Man said diluted earnings per share on a like-for-like basis are on target to grow by more than 10% for the six months ending Sept. 30 from same period a year ago. Assets under management, it added, rose to $68 billion from $61.7 billion at March 31, though most of that growth took place in the three months from April through June. "I think Man has proved its resilience in terms of the diversification of its product offering and its financial strength," Man Chief Executive Peter Clarke said in an online video posted on the firm's web site. "Tough markets test investment managers. They also test investment structures. And I'm pleased to say that the turmoil of the summer did not cause any of our products to de-gear." Man reported that net management fee income growth would be up more than 15% from the corresponding year-ago period. Net performance fee income is expected to be up as well, though no amount was specified. Meanwhile, AHL, Man's flagship $17 billion quant fund, has rebounded after dipping in early August. It gained 1.09% for the week to the close of business on Monday [Sept. 24], taking its 12-month return to 12.7%. That is in line with the fund's 13% annualized return since inception. Sales for the six months through September were estimated at $7.8 billion. Guaranteed capital products had sales of $3.2 billion, while institutional sales were $3.6 billion. Underscoring the climate of nervousness in markets, private investor redemptions, at $2.1 billion, more than doubled open-ended private investor sales of $1 billion. Institutional redemptions were $2.2 billion. "These results demonstrate the resilience of Man's business," Mr. Clarke said. "The diversification of our investment styles, despite recent turbulence in financial markets, has generated $2.4 billion of positive performance for our investors in the first half." He added: "Today the majority of our assets are within 5% of performance fee high water marks. Redemption rates are virtually unchanged on the prior year." Mr. Clarke acknowledged that Man Global Strategies had a "tougher time" than some other funds. "MGS has a more focused portfolio than a fund of funds, and that focus was on a lot of market neutral equity-based strategies. And the underlying managers there did see liquidity evaporate and volatility spike through the summer. So that did cause them to have a more difficult August." Man's fund of funds arms, RMF in Switzerland and Glenwood in the United States, saw a "slightly negative performance" in August, but outperformed their peers, Mr. Clarke said. He added that both were ahead over 12 months and from the beginning of 2007. Shares in Man Group closed up 2.2% at 535 pence Tuesday. That is still well off the 635 pence high recorded in early July, but marks a strong recovery from the lows in August. Man is to report interim results on Nov. 8. Since April, Man has returned $770 million to shareholders through a $250 million final dividend and share repurchases of $520 million. Man said it remains committed to return the net $2.8 billion in proceeds from the float of MF Global to shareholders before the end of the calendar year. It estimated the distribution to shareholders at about $1.40 per share.