Man Group boasted stronger than expected inflows in its first quarter as demand from investors keen to profit from bleak financial markets helps the world’s biggest listed hedge fund manager accelerate its own belated recovery from the credit crisis.
Man, which only began winning back investors earlier this year after two years of outflows, reported net inflows of $3.7-billion (U.S.) for the first quarter of its financial year, up from $700-million in the three months to end-March.
Analysts at Singer had expected $2.5-billion of net inflows. Man’s resurgence has been helped by the launch of an open-ended version of flagship computer-driven fund AHL in Japan, which has now raised $2.3-billion.
Total assets rose to $71-billion, marginally below analysts’ forecasts, from $69.1-billion at end-March after tough markets knocked $1.1-billion off the value of its funds.
“This rise ... masks a significant amount of progress in terms of net sales,” said Singer analysts in a note.
However, Man added that AHL, a $23.9-billion fund named after 1980s founders Michael Adam, David Harding and Martin Lueck, is 12 per cent below its so-called “high-water mark,” the level above which it can earn lucrative performance fees.
The fund, which has suffered from a lack of market trends it can latch onto and which was hit by May’s commodities sell-off, is down 3.2 per cent between May 30 and July 4.
“The fly in the ointment remains AHL’s performance,” said Peel Hunt analyst Mark Williamson in a note.
“We remain of the belief that AHL as a strategy is not broken and that investment performance will reassert but this is taking much longer than we had hoped.”
Man said the “black box” fund is still defensively positioned in bonds and had significantly cut its short bet on equities.
Meanwhile, hedge funds managed by GLG – the firm it bought last year for $1.6-billion to boost assets and diversify its business – saw performance losses on average this quarter.
GLG’s Alpha Select was down 5.6 per cent in the two months to end-May and Atlas Macro was off 2.1 per cent. Its long-only funds are roughly flat.
In May, Man announced that influential chief operating officer Emmanuel Roman, who was co-CEO at GLG and previously a senior partner at Goldman Sachs, had joined the board.
“Current markets are creating challenging performance conditions for most asset classes, and our assumption is that investor sentiment will remain patchy over the summer months,” said CEO Peter Clarke in a statement.
Mr. Clarke told Reuters at last month’s GAIM conference in Monaco that Man saw higher net inflows in the three months to June than the previous quarter.
Having suffered a painful fallout from the credit crisis in which assets dropped below $40-billion last year, Man is now running a similar level of assets to 2008.
However, its recovery has been slower than the wider hedge fund industry, which began to see clients return as early as 2009 and this year saw total assets balloon above $2-trillion for the first time, according to Hedge Fund Research.