24 Mar 2010
Assets under management at Man Group are forecast to fall to $39.1 billion at the end of March, a decline of nearly 7.8% from December 31, the hedge fund group reported in a market update ahead of full year results due for release on May 27. It blamed the fall on a negative December performance of its flagship AHL managed futures fund and client withdrawals.
The performance drawdowns and decline in AUM, affected by redemptions of $2.5 billion, hit total net fee income, which is forecast to fall 57% in the year to March to $530 million from $1.24 billion in the year earlier period. Net performance fees plunged to $80 million from $358 million a year earlier, while management fees fell to $450 million from $885 million
The decline in AUM is being partially offset by Man winning multi-manager mandates for around $1.5 billion of institutional assets during the quarter to March and what the group called “a strong forward pipeline of prospects.” It also noted that while redemptions occur on an immediate time scale, mandate wins, many of which are managed accounts, take months to set up. Man estimated new sales at $1.0 billion.
After a fallow period in 2009 when managed futures product AHL saw drawdowns, the flagship fund has begun to recover, giving positive performance since 1 January.
Profit before tax and adjusting items for the year ending 31 March is estimated at $530 million, giving diluted earnings per share of an estimated 23 cents. Man intends to pay a final dividend of 24.8 cents per share giving an unchanged total dividend of 44 cents per share. The group said its financial position remains strong, with a regulatory capital surplus of $1.5 billion and net cash of $1.5 billion.
Among institutional clients, Man said redemptions from some products and segments was occurring hand in hand with strong investor appetite for solutions which offer flexible investment strategies, transparency and detailed risk and return reporting. Clarke added that Man has focused on catering to these needs, largely through rolling out managed accounts.
Private investor sales are estimated to be $6.7 billion for the year to March. Man said sales remained muted in the fourth quarter, reflecting generally subdued private investor appetite across the industry as well as the associated effects of negative AHL performance. The majority of the fourth quarter flows came from open-ended AHL formats, where investors have seen buying opportunities at attractive entry levels.
Looking forward, there is a strong pipeline of private investor opportunities in Japan, in the continued build-out of the UCITS III range in Europe and in regulated onshore product initiatives in Asia Pacific territories and the Americas.
Private investor redemptions are expected to remain low in the quarter to March, Man said. As a result, the private investor net inflow for the financial year to March is expected to be $2.1 billion. Taking into account investment movement, FX and other effects, private investor funds under management is expected to be $26.7 billion at the end of March, down 4% from March 2009.
Institutional sales are estimated at $1.5 billion for the year to March. The $1.5 billion of new mandates awarded in the quarter to March (and to be included in AUM totals in coming quarters) includes mandates from a UK pension fund, an Italian insurance company and a German private bank.
Man added that institutional redemptions were the most significant factor in fund outflows for fiscal 2010 as a whole and resulted largely from client demand for liquidity. It forecasts quarter to March institutional redemptions at $1.4 billion, giving a net outflow of $1.0 billion for the quarter and $6.6 billion for the year. In total, institutional investor funds at the end of March are expected to be $12.4 billion compared with $19.0 billion a year ago. Quarterly institutional redemptions to be paid on 1 April 2010 are expected to remain low, at around $350 million.
Man acknowledged that trading conditions were difficult throughout the 2009 calendar year for trend-following strategies like AHL, with gains in stock indices and metals more than offset by sudden market reversals in currencies and bonds. It blamed this for AHL’s 6% drawdown in December and for a knock-on effect on sales and investment exposure in the quarter to March.
Man said its multi-manager business continues to deliver performance in line with its targeted low-beta, diversified style, which saw it underperform in the beta-driven markets of 2009 but outperform in 2008. It added that thematic funds delivered strong performance, with the Emerging Market Opportunities Fund and the Energy Fund winning awards.
Man shares traded down almost 1% at 240 pence in London morning trading.
The performance drawdowns and decline in AUM, affected by redemptions of $2.5 billion, hit total net fee income, which is forecast to fall 57% in the year to March to $530 million from $1.24 billion in the year earlier period. Net performance fees plunged to $80 million from $358 million a year earlier, while management fees fell to $450 million from $885 million
The decline in AUM is being partially offset by Man winning multi-manager mandates for around $1.5 billion of institutional assets during the quarter to March and what the group called “a strong forward pipeline of prospects.” It also noted that while redemptions occur on an immediate time scale, mandate wins, many of which are managed accounts, take months to set up. Man estimated new sales at $1.0 billion.
After a fallow period in 2009 when managed futures product AHL saw drawdowns, the flagship fund has begun to recover, giving positive performance since 1 January.
Profit before tax and adjusting items for the year ending 31 March is estimated at $530 million, giving diluted earnings per share of an estimated 23 cents. Man intends to pay a final dividend of 24.8 cents per share giving an unchanged total dividend of 44 cents per share. The group said its financial position remains strong, with a regulatory capital surplus of $1.5 billion and net cash of $1.5 billion.
“Private investor sales in the quarter (to March) were lower, although redemptions have continued to fall back towards their historically low levels,” said Peter Clarke, Chief Executive. “This dynamic is something we have observed in previous periods following negative AHL performance. The catalyst for improved sales will be material positive performance in the managed futures style and from AHL, and it is pleasing to note that we have seen both a positive calendar year so far and a strong March performance month-to-date.”
Among institutional clients, Man said redemptions from some products and segments was occurring hand in hand with strong investor appetite for solutions which offer flexible investment strategies, transparency and detailed risk and return reporting. Clarke added that Man has focused on catering to these needs, largely through rolling out managed accounts.
Private investor sales are estimated to be $6.7 billion for the year to March. Man said sales remained muted in the fourth quarter, reflecting generally subdued private investor appetite across the industry as well as the associated effects of negative AHL performance. The majority of the fourth quarter flows came from open-ended AHL formats, where investors have seen buying opportunities at attractive entry levels.
Looking forward, there is a strong pipeline of private investor opportunities in Japan, in the continued build-out of the UCITS III range in Europe and in regulated onshore product initiatives in Asia Pacific territories and the Americas.
Private investor redemptions are expected to remain low in the quarter to March, Man said. As a result, the private investor net inflow for the financial year to March is expected to be $2.1 billion. Taking into account investment movement, FX and other effects, private investor funds under management is expected to be $26.7 billion at the end of March, down 4% from March 2009.
Institutional sales are estimated at $1.5 billion for the year to March. The $1.5 billion of new mandates awarded in the quarter to March (and to be included in AUM totals in coming quarters) includes mandates from a UK pension fund, an Italian insurance company and a German private bank.
Man added that institutional redemptions were the most significant factor in fund outflows for fiscal 2010 as a whole and resulted largely from client demand for liquidity. It forecasts quarter to March institutional redemptions at $1.4 billion, giving a net outflow of $1.0 billion for the quarter and $6.6 billion for the year. In total, institutional investor funds at the end of March are expected to be $12.4 billion compared with $19.0 billion a year ago. Quarterly institutional redemptions to be paid on 1 April 2010 are expected to remain low, at around $350 million.
Man acknowledged that trading conditions were difficult throughout the 2009 calendar year for trend-following strategies like AHL, with gains in stock indices and metals more than offset by sudden market reversals in currencies and bonds. It blamed this for AHL’s 6% drawdown in December and for a knock-on effect on sales and investment exposure in the quarter to March.
Man said its multi-manager business continues to deliver performance in line with its targeted low-beta, diversified style, which saw it underperform in the beta-driven markets of 2009 but outperform in 2008. It added that thematic funds delivered strong performance, with the Emerging Market Opportunities Fund and the Energy Fund winning awards.
Man shares traded down almost 1% at 240 pence in London morning trading.
