Man Group, one of the world’s biggest hedge funds, has posted weaker than expected inflows and said clients have asked for more of their money back in recent months ahead of further expected market turbulence.
The London-based company, which manages $142.3bn in assets, posted net client inflows of $100mn in the three months to June, a big slowdown from the $3.1bn in the first quarter and below analyst forecasts of about $800mn.
It also said it had experienced “a pick-up in redemptions from May onwards as clients realised gains to manage other issues in their portfolios”. The group expected “some volatility in flows in the near term”, said chief executive Luke Ellis.
Man’s shares, which are up 12.3 per cent this year, fell 4.5 per cent to 255.8p on Tuesday morning.
Hedge funds such as Man have generally fared better than traditional asset managers in this year’s turbulent markets: the S&P 500 equity index has fallen 13.6 per cent this year and government bond markets have sold off sharply because of worries about high and rising inflation.
But many have still been affected by the turmoil, particularly those managing equity-focused hedge funds or long-only portfolios.
Man’s long-only $15.1bn TargetRisk fund, which invests in equities and bonds, fell 14.8 per cent in performance terms and its Numeric Global Core fund lost 19.8 per cent, although both performed better than their benchmark indices. The value of Man’s long-only assets dropped $9bn during the second quarter.
Last year, the $3.8tn hedge fund industry had net inflows for the first time in four years, on hopes of a revival in performance after years of disappointing returns. But this year there have been net outflows of $7.7bn, according to data group HFR, in a sign that caution has returned. Across the sector, hedge funds on average are down 5.8 per cent this year.
Nevertheless, some parts of the industry are doing well. Computer-driven hedge funds, such as Man’s AHL unit, which tries to identify lasting price trends and patterns in markets, have profited by latching on to moves in bond and commodity markets. Its AHL Diversified fund gained 17.2 per cent in the first half while AHL Evolution, which bets on trends in about 800 niche markets, rose 10.9 per cent.
Chief financial officer Antoine Forterre said some investors who had suffered big losses elsewhere in their portfolios had reduced their positions in Man’s funds.
While the firm had a “very strong pipeline” of inflows, he added: “we can’t control what clients want to do and have to do”.
Inflows this year have been concentrated in absolute return funds, which tend to charge higher fees than long-only funds.
Forterre added that, even after a tough start to the year for global markets, Ellis’s view was that “probably there’s more to come”.
Man’s core profit before tax for the six months to the end of June rose 22 per cent to $395mn compared with the same period a year ago. This was well ahead of forecasts partly thanks to higher performance fees, including $187mn from the AHL Evolution fund alone.
The group suffered $4.6bn of investment losses and a further $4.6bn of losses from currency moves in the second quarter, leaving assets under management down 6 per cent.