Man Group yesterday posted lower profits and a further fall in assets, bucking the trend in a recovering hedge fund industry as clients continued to withdraw cash following poor returns from its flagship AHL fund.
The world’s largest listed hedge fund firm said assets – on which investment firms earn fees – were $39.1bn, down from $42.4bn in December, after clients withdrew a net $1.5bn in the first three months of the year, although this was less than half the withdrawals a year ago. The drop in assets was due mainly to poor performance from AHL, a black box fund named after 1980s founders Michael Adam, David Harding and Martin Lueck.
The fund, which makes money from following market trends, has been hit by sharp reversals in bond and currency markets. It has fallen 17.2 per cent over the past year during a strong period for the hedge fund industry, although it has made money since January. The shares rose two per cent to 246.7p.
“Our funds under management... were dominated by the consequences of the minus six per cent in December we saw from AHL,” said chief executive Peter Clarke. AHL’s losses had affected sales, he said, adding: “The catalyst for improved sales will be material positive performance in the managed futures style and from AHL...”
Two years ago, the firm’s assets under management were $74.6bn.
“We believe a sustained pick-up in AHL performance is needed before net inflows are to be seen and hence there remains risk to our $3.6bn net inflow forecast for the coming year,” said Credit Suisse analyst Rupak Ghose.
Pre-tax profit was estimated at $530m, less than half the level a year ago and below analyst forecasts.
City A.M. Reporter