Strong investment performance from Man Group’s alternative, absolute return, and multi-manager strategies again helped the world’s largest listed hedge fund group to offset heavy falls across its systematic and discretionary long-only suite of products in the third quarter.
The group’s Q3 trading statement shows Man’s total assets under management falling by some 3 per cent over the quarter to USD138.4 billion, from USD142.3 billion at the end of June – and from a high of USD151.4 billion at the end of Q1 2022.
Net inflows into alternatives of USD900 million was outweighed by USD1.4 billion of long-only outflows to give overall net outflows of USD500 million – while investment performance gains of USD1.5 billion from alternatives, during what the group described as “a very difficult quarter for the asset management industry”, just failed to compensate for the USD1.7 billion of long-only losses sustained in a period of extreme market turbulence.
Significant negative FX impact of USD4.5 billion in Q3 – largely due to the strength of the US dollar in recent months – contributed to an overall drop in AUM of USD3.9 billion. But the fall was concentrated entirely on the long-only side, with long-only assets falling by almost USD5 billion in the quarter, while alternative assets rose by USD1 billion.
Net inflows of USD900 million into alternatives resulted from strong flows of some USD3.4 billion into the firm’s multi-manager solutions offerings, notably into infrastructure and direct access products – with multi-manager AUM rising to just under USD20 billion as at the end of September.
The substantial outperformance by the group’s alternative strategies has led to a significant rebalancing in overall assets under management. As at the end of Q3, alternatives – comprising absolute return, total return, and multi-manager – accounted for more than 70 percent of firmwide AUM, up from 62 per cent at the start of this year.
The performance of alternatives, both in the last quarter and for the year to date, stand in stark contrast to the losses in long-only – with the group’s AHL systematic managed futures strategy leading the way.
In the three months through the end of September, AHL Dimension, AHL Diversified, and AHL Alpha were up by 6.2 per cent, 5.2 per cent and 3.7 per cent – giving respective year-to-date gains of 12.7 per cent, 23.2 per cent and 12.7 per cent.
By contrast, the group’s systematic and discretionary long-only products have taken a pounding in the increasingly dire market conditions – with year-to-date falls of 27.2 per cent for GLG Continental European Growth, 26.5 per cent for Numeric Emerging Markets Core, 23.1 per cent for Numeric Global Core and 19.7 per cent for Numeric Europe Core.
Despite the poor performance of many hedge funds this year – especially in equity-focused strategies – Man Group’s FRM multi-manager operation has navigated the challenging market environment to good effect.
To the end of September, the group’s flagship FRM Diversified multi-manager fund was showing a positive return of over 2 per cent – compared with a loss for the year of almost 5 per cent in the HFRX Global Hedge Funds Index and a year-to-date drop of nearly 20 per cent for the HFRI Equity Hedge Index.