Stanley Fink’s Japanese legacy still paying off

THERE have been relatively few good news stories about quant funds recently, and even fewer about Japan. That’s why the barnstorming launch of a Japanese fund that tracks Man Group’s AHL managed futures strategy comes as such a surprise. Analysts had expected the Nomura Global Trend fund, which was marketed to the Japanese bank’s investors in the aftermath of the earthquake, to attract $500m – just one third of the $1.5bn total.

That Japanese clients were willing to invest in Man Group’s flagship product will come as a welcome boost for the fund manager, but it is also a vote of confidence in quant funds, which use computer algorithms to make investment decisions. Just over a year ago, these funds had been all but written off by some commentators after several incurred huge losses. In 2009, AHL – which then accounted for around half of Man Group’s assets – lost $1.2bn or 17 per cent; performance has been better since then, if somewhat volatile, but the fund has struggled to shake off the shadow cast by that annus horribilis.

Man Group has always had a good reputation in Japan, thanks to strong partnerships with Nomura and Mitsubishi Bank, which were forged by former chief Stanley Fink; Japanese funds account for 15 per cent of its assets. Fink outlined his reasons for pushing into Japan back in 2006, just before he quit as chief executive: “We work with a Japanese bank that has $1,000bn of its customers’ money sitting there earning 0.25 per cent. If we could manage just five per cent of that we’d double the size of the business,” he said. With Japanese interest rates now at virtually zero, it’s a rationale that still holds true.