Man Group Plc Posts $5bn In Client Outflows

Market volatility and poor performance by hedge fund firm’s flagship fund plague former FTSE 100 firm MAN GROUP PLC ORD USD0.03428571 (LON:EMG).

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Former FTSE100 firm Man Group Plc (LSE: EMG) today reported that clients withdrew money for an eighth consecutive quarter, as the hedge fund firm faces more poor performance from its flagship AHL fund.

Client outflows for the first half of the year (through 30 June) were $5bn, the company said — with $3.7bn being withdrawn from its funds in the first quarter and a slight improvement in the second quarter as clients withdrew “just” $1.3bn.  

Though total outflows weren’t as bad as analysts had expected — and shares were actually up today on the interim management figures — the trend is still an ugly one.

Funds under management dropped 9% to $52bn for the first six months of the year, reflecting sales of $6.5bn and redemptions of $11.5bn. The group said it made a first-half adjusted profit before tax of $134m.

Man Group reported that the majority of the increase in sales between the first and second quarters came from strong sales of the Japan CoreAlpha strategy, which raised $1.2bn in the second quarter while other key strategies slipped.

Manny Roman, who took over as CEO earlier this year, has no easy job as he tries to win back clients and revive the struggling Man Group.

“Man’s investment performance was varied: good in discretionary and challenging in trend following,” Roman said.

“In terms of flows, investor appetite remained muted as renewed market volatility tempered investors’ willingness to put their money to work. A sustained improvement in investment performance, particularly from AHL, remains the key prerequisite for an improvement in net flows.”

Man Group’s shares have slipped since late May, after the flagship computer fund AHL was hit by a sell-off in bond and equity markets, as investors feared the U.S. Federal Reserve would soon cut back on its bond-buying policies.

CEO Roman commented:

Looking forward, trading conditions remain tough and we do not see any improvement in the near-term outlook. However our focus on investment performance, together with the actions we have taken to diversify the Group’s investment management activities, enhance distribution, de-risk our balance sheet and reduce our infrastructure costs mean we are better placed to cope with such circumstances. We intend to continue with this approach but it will take time.”

No doubt, investors today have to decide how much time they’re willing to give Roman as he works to reverse the trends at Man Group. Perhaps the interim dividend of 2.6 cents per share to be paid in September will help.

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> Jill does not own shares of any company mentioned.

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