Man Group suffered an eighth straight quarter of client withdrawals, confounding hopes that a recovery in its biggest fund would help the world's largest listed hedge fund enjoy the industry's rebound. Man, which is buying smaller rival GLG in a bid to boost assets and diversify away from computer-driven funds, said on Tuesday clients pulled out a net $600 million in the three months to the end of September.
This was below the rate of withdrawals in the three months to June, but above the level of a year ago. Some clients are likely to have been put off by the 16 percent loss from Man's flagship $21.9 billion AHL computer-driven fund last year.
The outflows came from private clients, while institutions put in a net $100 million overall, the first net inflow from such clients in two years. Chief Executive Peter Clarke said on a call to analysts he expects institutional net inflows to continue. Man shares were down 2.5 percent at 213.7 pence at 1156 GMT, while the FTSE 100 fell 0.3 percent.
AHL - the algorithmic trading fund named after 1980s founders Michael Adam, David Harding and Martin Lueck - is up around 7.6 percent this year, well ahead of average gains. However, clients are still on average 7 percent below the so-called "high-water mark" above which the company can charge them performance fees.
Performance at AHL, which tries to make money by latching onto market trends, is also being boosted by new programs to limit losses and reduce reliance on its traditional strategy of following market momentum. "If you are to buy into Man Group at current levels you still need to believe that AHL performance can still recover," said analysts at Numis, who rate the stock a "buy" on valuation and recovery grounds, but are cutting their forecasts. AHL's gains helped lift Man's assets - on which fund firms earn their standard management fees - by 3 percent to $39.5 billion, although they are still around half the level reached in the summer of 2008.