Man Group says hedge fund industry growth rate to continue

Date: Tuesday, October 2, 2007
Author: Laurence Fletcher, Reuters.co.uk

LONDON (Reuters) - The hedge fund industry's rapid growth rate of recent years looks unlikely to change markedly, despite poor performance from some funds in this summer's market turbulence, Man Group's chief executive told Reuters.

"I'd say there is no current indication that industry growth rates will materially change," Peter Clarke, chief executive of the world's largest listed hedge fund firm, said in an interview on the sidelines of a Reuters-hosted event in London on Monday.

"I can only speak for Man Group ... (in that) we have not seen significant rates of redemptions. We continue to see institutional appetite for products."

Clarke's comments come after a tough August for the booming hedge fund industry -- which has the ability to make money in all market conditions -- as a surge in U.S. subprime defaults led to widespread global market volatility.

The average portfolio lost 1.53 percent in August after a flat July, according to the Credit Suisse/Tremont Hedge Fund Index.

However, while some prominent funds, for instance one of Third Point LLC activist investor Dan Loeb's portfolios, posted double-digit losses in August, the average decline was not as steep as some investors had feared.

"People will look at the events of the summer and will need to understand the liquidity consequences of certain strategies ... People will need to ensure they do appropriate due diligence on the underlying content (of strategies)," Clarke said.

"The industry will see a reallocation of capital between underlying strategies. But the opportunity set will continue to evolve ... There are opportunities in a number of strategies, including the credit-related space."

Last week Man Group said its assets had risen to $68 billion (33 billion pounds). Assets under management in the global hedge fund industry reached nearly $2.5 trillion in mid-2007, according to HedgeFund Intelligence.

Meanwhile, on Monday the 880 million-pound Dexion Absolute trust, a fund of hedge funds, said it is looking to raise 200 million pounds by issuing new shares.