THE GLOOM surrounding the hedge fund industry deepened yesterday when Man Group said it would slash costs by another $75m (£48.6m) amid global market turmoil.
The world’s largest listed hedge fund manager will shave about 10 per cent from its cost base after reporting a second consecutive quarter of heavy client outflows, with total assets under management falling 9.45 per cent to $58.4bn at 31 December.
The cuts – $50m this year and $25m in 2013 – come on top of previously announced savings of $40m.
Chief executive Peter Clarke told City A.M. the saving created the “right balance” for Man but he appeared to leave the door open to going beyond $75m.
“It is unlikely we are going to dramatically change that but clearly we are going to have to wait and see.”
Shares in Man have halved since late September but yesterday’s update cheered investors, with the stock closing up 6.82 per cent at 114.4p.
Earlier Man said clients pulled a net $2.5bn over the three months, roughly in line with analysts’ forecasts.
“We are seeing investors respond to performance and market sentiment,” added Clarke, who said net outflows eased off last month.
Client exits slowed at Man’s GLG unit, which it bought for $1.6bn in 2010, but picked up at AHL, its flagship computer-driven vehicle. The $21bn fund lost 6.4 per cent in 2011.
In 2011 GLG’s European Long-Short, run by star manager Pierre Lagrange, rose 7.2 per cent in performance terms but its Alpha Select fund fell 10.2 per cent, although performance has picked up in January.
Noam Gottesman has quit as co-chief executive of GLG to become non-executive chairman in the US.