Man Group saw its funds under management (FUM) rise to USD71bn as of 30 June 2011, up from USD69.1bn at 31 March, 2011, according to the company’s latest interim management statement.
Man also recorded record sales in the quarter of USD9.0 billion to give a net inflow of USD3.7 billion after redemptions of USD5.3 billion.
The company’s recently launched open ended onshore AHL fund in Japan now has USD2.3 billion under management, while revenue synergies from Man’s GLG acquisition include USD1.0 billion from an emerging markets currency product in Japan and USD400 million from the first guaranteed product blend – Man IP 220 GLG.
Challenging market conditions led to USD1.1 billion of negative investment movement in the quarter, with AHL down 0.6% in the period, and 12% from peak on a weighted average basis.
Within GLG’s diverse product range, European long short and European distressed styles had positive performance in the period and global macro and other long short strategies were negative.
Other movements of USD1.8 billion were driven by routine rebalancing of investment exposure in the guaranteed products after negative AHL performance in the rebalancing period; FX movements added USD0.8 billion; acquisition of the remaining 50% of Ore Hill added USD0.3 billion.
The company’s financial position though, remains strong, with a regulatory capital surplus of around USD900 million, net cash of around USD900 million and total available liquidity resources of around USD4.8 billion.
Peter Clarke (pictured), Chief Executive of Man, says: “We are pleased to be reporting strong net inflows from investors over the last quarter. Following the successful integration of GLG at the end of 2010, we are seeing revenue synergies building, with investor flows into AHL, GLG strategies, and combination products.
“Current markets are creating challenging performance conditions for most asset classes, and our assumption is that investor sentiment will remain patchy over the summer months. The combination of our broad range of liquid investment styles, ability to craft portfolio solutions for investors, and the wide geography of our franchise, is a key advantage in these markets."
Man saw net inflows of USD3.7 billion in the first quarter, reflecting record sales of USD9.0 billion and redemptions consistent with historical levels, at USD5.3 billion. There was a net inflow into alternative funds of USD4.1 billion and an outflow of USD0.4 billion from long only styles.
Guaranteed products saw their highest sales for two years, at USD0.5 billion, driven by the launch of Man IP 220 GLG, the first guaranteed product to combine AHL and GLG styles. Guaranteed redemptions held steady at USD0.6 billion.
Sales of open-ended alternatives were a record USD6.2 billion and redemptions were USD2.0 billion. Within this category, AHL sales of USD2.9 billion reflect the recent launch of the first onshore open-ended managed futures product in Japan, which now has USD2.3 billion under management. GLG sales accelerated to USD3.3 billion with strong flows into equity long/short and emerging markets styles, largely in Europe. The USD1 billion raised from an emerging markets currency product in Japan – a territory where GLG had very few investors before its integration into Man – provides tangible evidence of the benefits of combining GLG content with Man’s strong distribution network.
Net flows into institutional fund of funds were flat, with sales of USD0.8 billion driven by demand for commodity and convertible style funds, as well as a small amount of funding to previously announced managed account mandates. USD2 billion is still to fund from previously announced mandate wins at Universities Superannuation Fund and Bayerische Versorgungskammer. Quarterly institutional redemptions on 1 July 2011 are around USD470 million.
Long only styles saw sales of USD1.5 billion and redemptions of USD1.9 billion. The majority of this flow reflects the migration of Japan Core Alpha FUM from a legacy low margin mandate to other higher margin vehicles.
Investment performance had a USD1.1 billion negative effect on FUM in the first quarter.
AHL Diversified plc was down 0.6% in the three months to 30 June 2011, leaving AHL approximately 12% below peak on a weighted average basis. AHL has remained defensively positioned in bonds, but has significantly reduced its short exposure to equities. In FX, its prevalent exposure has been to be long a basket of currencies against the US dollar. Over the period, AHL has seen flows-driven asset growth of 5%.
Performance for GLG’s range of alternative investment styles was generally negative in the quarter, with the Global Opportunity Fund (which allocates across GLG strategies) down approximately 2%. Returns in the period ranged from positive performance in European long short and European distressed to negatives in global macro and other long short strategies. Performance in long only styles was broadly flat in the quarter.
FX generated a positive contribution of USD0.8 billion in the first quarter, mainly due to the strengthening of the Euro, Swiss Franc and Japanese Yen against the US dollar.
The routine rebalancing of investment exposure in guaranteed products led to a negative USD1.8 billion of other movements, driven by 5.4% of negative performance from AHL in the rebalancing period.