Private investors prove boon for hedge fund's margins

Date: Friday, October 2, 2009
Author: Yrokshire

Man Group, the world's largest listed hedge-fund firm, said that slowing outflows helped to lift assets to an estimated $43.8bn (27.2bn) at the end of September at the top end of forecasts boosting its shares.

The firm, which is seeing private investors put money into its products even as institutions withdraw cash, said that net client outflows slowed to $500m in the third quarter, well below the $1.4bn in the previous quarter.

"The mix has shifted towards private investors, which is good for margins, "chief executive Peter Clarke said.

Net redemptions by institutional investors slowed in the past three months and they looked set to further improve, Man said, with net redemptions of $700m set to be paid at the start of its third quarter.

Man Group, whose share price has more than doubled since its year low in March, said in July that it expected to return to overall net client inflows in the six months to March 2010.

But while private clients supported the business, net sales to such higher-margin clients still fell, and were down to $800m from $1.9bn in the three months to June.

UBS analyst Carolyn Dorrett attributed the fall in private investor sales to the weak performance of Man's flagship AHL Diversified managed futures strategy, which is heading for its first calendar year of losses since launch in 1996.

"With significant momentum across the business, new products and new market opportunities, Man is strongly positioned for growth," Clarke added in a statement.

A year ago, Man's assets were $70.3bn.