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Man sees market volatility hit profits

Date: Thursday, September 29, 2011
Author: Wendy Chothia, HedgeWeek

Man Group's profits for the last six months are down from USD180m to USD145m according to an unscheduled trading statement issued by the group.

Peter Clarke (pictured) Chief Executive of Man, says: "The extreme volatility of markets in recent months has created challenging performance conditions across asset classes. This has tested investor appetite for risk but also reinforced the need for diversifying, non-correlated investment returns. The benefits of Man's strategy to build out a range of investment styles to suit differing market conditions have been strongly evident in this period. AHL is up 7.7% in the five months to end August and is around 5% from high water mark, and GLG macro and European long/short strategies were also positive. Other hedge fund styles saw mixed performance across the period as concerns around global growth prospects and sovereign debt levels, especially in the Euro zone, precipitated violent swings in equity, currency and bond markets. However, our overall hedge fund performance in the quarter to 30 September was encouragingly positive.

“As anticipated, investor sentiment continued to weaken across the summer with lower sales in our second quarter and some increase in redemption rates, notably in September. The first half overall saw net inflows, and although the second quarter saw a net outflow it was encouraging to see positive flows in our institutional multi-manager business, as managed account mandates from BVK and USS continued to fund. We have continued to benefit from our strong regional distribution franchise. Our USD2.5 billion Japan AHL product, launched in April 2011, is performing well; we have new products launching in Canada and the United States and have added investment management strength into the important Asian markets.
“In terms of financial performance, although assets under management reduced in the second quarter, primarily as a result of market movements in long only and the impact of foreign exchange translation from the weakening Euro, management fees for the half have been broadly stable on a like-for-like basis. Our capital and liquidity position remains very robust and the dividend is being maintained pro rata across our new financial year end.
“Looking ahead, we are assuming that investor appetite will be generally suppressed for the remainder of the year. However, we remain confident that our broad range of liquid, diversifying return streams, strong geographic base and robust financial position will continue to differentiate Man's investment capabilities, even in turbulent markets."