Man Group AUM up 7% in H1 as AHL momentum builds

August 07, 2014  

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Man Group’s funds under management climbed to $57.7 billion during the first half of 2014, a 7% rise from the $54.1 billion recorded at the end of 2013.

But the positive momentum for the London-based group’s growing volume of assets under management was coupled with somewhat mixed performances across its managed futures, traditional hedge fund and multi-manager strategies.

In the six months to 30 June, adjusted profits before tax rose 10% to $148 million, compared to the $134 million for the same period in 2013. Net inflows to Man Group stood at $2.8 billion, an impressive turnaround from the $5.0 billion of outflows seen in the first half of last year.

Redemptions, meanwhile, were down by 17% to $9.6 billion, compared to $11.5 billion in the first half of last year – and gross sales shot up 91% to $12.4 billion, which marked a sharp hike from the $6.5 billion seen in H1 2013.

On the flipside, the absolute performance of the strategies run by Man’s three investment management units – AHL, FRM and GLG – was somewhat mixed. Manny Roman, chief executive officer of Man, said in a statement that AHL’s momentum-based strategies benefitted from fixed income market trends, delivering strong returns, but that GLG’s equity long/short strategies suffered from a strong sector and factor rotation, rounding out the six-month period with some negative performances.

"Whilst it has been a positive first half for the firm and we recorded another quarter of net inflows in Q2, we remain cautious as we look to the second half of the year," Roman said.

"Investment performance in H1 was mixed amid a continued volatile market environment. AHL performed strongly on an absolute and relative basis across all its alternative strategies. Performance elsewhere was good in credit and discretionary long-only, but below expectations in equities and macro."

AHL’s strong performance was reflected in its $70 million of performance fees in the first half, 87% of which were from the AHL Evolution fund. The Evolution strategy, which trades a range of non-traditional markets not typically traded by CTA managers, continued its strong run and was up 13.3% for the first six months of the year.

The AHL Diversified Programme posted a solid 8.7% gain to the end of June at a time of reviving fortunes in the embattled CTA space, while the AHL Alpha strategy, which runs at lower volatility, was up 6.0%.

MSS’s Europe Plus strategy was up 3.5%, underperforming its benchmark by 2.7%, whilst the Man systematic strategies group’s TailProtect product was down by 6.8% but outperformed its benchmark by 12.6%.

The discretionary strategies in the GLG group saw mixed results: credit strategies were broadly up, while the equity long/short strategies suffered. Among the gainers were GLG’s European Distressed (up 5.9%), GLG Market Neutral (up 4%) and GLG Cross Asset Value (CRAVE) (up 6.8%), though the GLG Multi-Strategy and the Japan CoreAlpha funds both saw negative returns at -1.9% and -1.4%, respectively.

Meanwhile, the FRM business saw muted performance across its multi-manager fund range in H1. The FRM Diversified II fund, an actively-managed diversified strategy, was up slightly at +1.4%. FRM Equity Alpha, a statistical arbitrage fund, was up 1.6%. Managed futures performance was flat however, with FRM Sigma returning +0.2%.

In its interim results statement, Man pointed to the strengthening of its US presence with the recently-announced acquisitions of Numeric and Pine Grove as a key strategic boost to its wider objectives of North American growth and building a quantitative fund management unit.

US-based quant manager Numeric has $14.7 billion of funds under management, and is set to become part of the Man Group in Q3 or Q4. The takeover of Pine Grove – a US credit fund of hedge fund manager with $1 billion of funds under management – has been completed this month.

"In the first half of 2014, we made progress towards our strategic objectives taking significant steps to position the firm for future growth and largely completing our restructuring process," Roman said, noting that the acquisitions of two "highly complementary" US businesses would enhance its offering for clients.

He added: "We remain committed to investing in talent, research and technology and building the optimal environment to deliver superior risk adjusted performance for our clients which will ultimately translate into the delivery of value for our shareholders."

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