Man emerges unscathed from turmoil
By James Mackintosh in
Published: September 25 2007 08:37 | Last updated: September 25 2007 18:10
Man Group came through this summer's market turmoil almost unscathed as the listed hedge fund manager increased sales and fees and predicted a 10 per cent rise in earnings for its first half.
Man reported assets under management of $68bn, up by $1bn since the end of June in spite of poor performance across its suite of funds.
The results are likely to calm concerns that investors might flee hedge funds in the wake of high-profile disasters, including the collapse of two Bear Stearns funds and heavy losses at several Goldman Sachs quantitative funds.
Peter Clarke, chief executive, said: "These results demonstrate the resilience of Man's business."
Man's shares rose 11½p, or 2.2 per cent, to 534½p.
It saw a small increase in redemptions from its funds by private investors to $1.1bn during the three months that will end on September 30 compared with $1bn in the previous quarter, while withdrawals by institutional investors fell.
Many analysts had been concerned that the credit squeeze and the high-profile failures of some hedge funds could prompt redemptions, or a slowdown of sales – neither of which happened.
Sales of $7.8bn in the six months to September 30 were split almost equally between the two quarters, although there was a big pick-up in sales of products carrying a guarantee as volatility increased.
Rupak Ghose, analyst at Credit Suisse, said the recovery in equity markets should help Man's sales.
"Markets have bounced and sentiment has bounced and that should help them with asset-raising," he said.
Mr Clarke, responding to a question posted on the company's website, said Man's funds had been able to maintain access to credit lines from investment banks and that none of its structured funds had to cut back gearing.
He said equity markets "appear to be somewhat calmer, although there is still behind that a sense of caution, perhaps even danger, in the air".
Man's main AHL division, which uses computers to spot trends in futures markets, fell sharply at the end of July and was down even more in August, but has staged a partial recovery this month.
Man predicted net management fees for the six months would be up more than 15 per cent on the $452m of the same period last year.
It said it still planned to return $2.8bn, or $1.40 per share, to shareholders in cash before the end of December.
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