Fri, Apr 18, 2014
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Man Group's management step changes transformation as tough environment persists

Thursday, October 25, 2012
Beverly Chandler, Opalesque London: Man Group’s October presentation for investors reveals that the company continues to struggle to realign its business as the “tough performance environment persists.”

It summarises its latest position as:

  • Funds under management down 10% to $52.7 billion
  • Adjusted PBT of $121 million (H1 2011: $231 million)
  • Statutory loss before tax of $164 million (H1 2011: profit of $70 million)
  • $233 million impairment of Multi-Manager ($142 million) and GLG ($91 million) goodwill
  • Interim dividend of 9.5 cents per share, as announced in May
  • Proposal to create new holding company to access distributable reserves

“Today’s presentations…mark a step change in our business transformation” the company says, giving examples of management decisions that they had made which have come out well, and those that haven’t. Planning assumptions that went well included assuming demand for regulated alternatives; a declining demand for guaranteed funds and the need to shape the business to match evolving investor demands.

Things that haven’t gone so well include expecting AHL performance to perform in line with its track record, instead the firm says: “Politically driven markets have negatively impacted absolute returns for trend followers”. Another expectation was that Man’s guaranteed product inventory would erode gradually, in line with its maturity profile whereas, in fact, the firm says negative AHL performance and c$6 billion of related de-gear since 2011 has significantly accelerated this process.

In a range of actions the firm is to align costs to reshaped business; integrate FRM; optimise AHL performance, which is running at 0.3% to June 2012; organically build-out GLG; market strong performance and thematic products and build their talent base.

Man compares the volatility of its flagship AHL funds, both Alpha and Diversified with its CTA peers, including David Harding (the ‘H’ of AHL)’s Winton Capital’s Diversified Trading Program. AHL Alpha’s annualised volatility over the past two years has been 10.5% while Winton’s Diversified Trading Program has had annualised volatility over the past two years of 8.0%.

Man’s AHL Diversified has had annualised volatility over the past two years of 14.0% while Aspect Capital’s Aspect Diversified Program has had annualised volatility over the past two years of 13.2%. BlueCrest Capital Management’ BlueTrend Fund Limited has had annualised volatility over the past two years of 12.7%.

The firm is also expecting to save $100m by 2013 by reducing the layers of management and complexity of group functions; eliminating unprofitable products and structures and being ‘disciplined’ on general day to day expenses and practices.

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Banner
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing
  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. CTAs could face new challenges in a rising rates environment[more]

    Bailey McCann, Opalesque New York: CTAs have taken a beating performance wise lately, and asset flows reports show that investors aren't sticking around to see how the movie ends. Now, a new white paper from Roy Niederhoffer and Coen Weddepohl notes that as interest rates start to tick back u

  2. Investing – Big hedge funds bought Puerto Rico's junk bonds, Fidelity explores new trading venue amid flash trade concerns, Crisis-era Greek bonds reward early buyers with big effective returns, Cargill unit discloses stake in Freddie preferred[more]

    Big hedge funds bought Puerto Rico's junk bonds From Reuters.com: Several large hedge funds doubled down on Puerto Rico in last month's giant bond sale despite the U.S. territory's financial struggles, the Wall Street Journal reported, citing confidential documents reviewed by the newspa

  3. Opalesque Exclusive: Classic Auto Funds Limited (CAF) launches several car investing funds[more]

    Bailey McCann, Opalesque New York: A new trend in alternative alternatives is emerging - car appreciation funds. Classic Auto Funds Limited (CAF) is the first to market with several funds that make super elite luxury cars into real asset investments. As a result of growing overseas demand couple

  4. Commodities – Popular value fund manager David Iben bets on Russia, gold,[more]

    From Reuters.com: With large bets on Russia and North American gold miners, one of the best performing stock pickers in the wake of the 2008 financial crisis is back with a new fund that reflects his deep aversion to following the crowd. In the Kopernik Global All-Cap Fund, David Iben is follo

  5. Opalesque Exclusive: Pensions, endowments, family offices reconsider life settlement investments[more]

    Bailey McCann, Opalesque New York: Hedge funds were once the largest investors in the life settlement industry, now the industry is seeing more interest from pensions, endowments and family offices directly. Life settlements have always been considered a niche part of the investing landscape, an