The world’s largest publicly traded hedge-fund manager, the Man Group, posted a pretax profit of $195 million in the first half of its fiscal year, ended September 2011.
The bad news is that profit is down from $227 million a year earlier; the good news is the decline is not as steep as the money manager, with about $63.5 billion AUM as of October 2011, had forecast. (Last month Man predicted its pretax, first half profit would be $185 million.)
Man saw record net outflows of $2.7 billion in the second quarter, particularly from GLG alternatives and long-only strategies, from which investors (particularly European retail investors) pulled $1.5 billion. The net outflows were the result of third-quarter redemptions worth $7.3 billion and sales of $4.6 billion.
Over the entire six-month period, Man recorded net inflows of $1.0 billion, including over $2 billion of cross-selling benefit from the GLG transaction (the Man Group acquired hedge fund manager GLG Partners in 2010).
Man’s flagship $24.9 billion AHL Diversified fund was up 8.4% over the six-month period ending September 26, 2011, according to the firm, although data compiled by Bloomberg suggests it then fell 6.2% in October.
Said Peter Clarke, Man’s chief executive, in a statement: “The last six months began with record sales, but ended with a spike in redemptions as extreme volatility severely tested investor risk appetite in the late summer. Since period end we saw reduced redemptions in October, and we ended the month with around $63.5 billion under management.
“We are planning on the basis that investor appetite will remain subdued whilst markets remain volatile and uncertain, but are well positioned to capture demand when sentiment improves and investors return to markets”
Man Group plans to repurchase $150 million of its shares by the end of the year. Man’s shares had plummeted as much as 22% in late September on the news that the firm’s asset base had declined by $6 billion since June. The firm had estimated surplus regulatory capital of $1 billion as of the end of September.