Man Group's New Ventures
You could say that London-headquartered Man Group has come back home. Chief executive Peter Clarke says they're moving into new territories and regulated product structures. One of those new territories is the UK on-shore market, which is new for internationally-oriented Man.
But the firm is engaged in a number of ventures. One is a managed account platform, primarily meant for institutional investors. Then there are new products for Australia, Taiwan and Hong Kong. In addition to the UCITS III fund for the UK, Man has another such fund for continental Europe.
Mr. Clarke, in a September 30th update of the firm's financials, summarized the developments. "Two new AHL UCITS funds are launching in Europe; we have had new regulated product approvals in our existing European and Asia Pacific markets; and we have launched the first on-shore product in Taiwan."
He said Man has not marketed on-shore in Europe until now, there is significant demand and some institutional investors want the UCITS vehicles. The new funds open AHL, Man's $20 billion-plus futures trading program, to a broader investor population.
Commenting on the difference between the new products and Man's established line of structured notes, which are offered for a set time and then close to investment, Mr. Clarke pointed out that many of the regulated products are open-ended. The UCITS funds will be additive to the existing products, he said at a conference call.
UCITS, sometime called a passport, is a European mutual fund structure that permits a fund to be sold in different countries with minimal additional regulatory work. UCITS III rules allow the use of derivatives and greater leverage, opening the way to managed futures and hedge fund products.
Mr. Clarke said that as the UCITS products become established, he expects them to generate significant capital inflows. The fixed cost of launching such funds is large but Man can achieve large scale to spread the cost, he argued. There are lots of opportunity in the current environment, he said.
Getting the regulatory go-ahead took longer than Man Group expected. It can take as long as 18 months to get approval, a difficult process that not every firm can manage, Mr. Clarke suggested.
For AHL Diversity, a UCITS fund meant for sophisticated UK investors, Man teamed up with Dexion Capital, a UK fund business that has experience with listed hedge fund products. The fund is scheduled to launch this month. Minimum initial investment is ?100.
Dexion chairman Robin Bowie said that for the first time UK investors will be able to access the returns and low correlation to traditional asset classes offered by AHL, which private investors all around the world have enjoyed for many years.
While Mr. Clarke emphasized Man Group's advantages in offering UCITS products, competition is heating up in this market. However, many new UCITS funds have strategies other than futures trading. Thus Man's AHL offerings have the distinctive benefit of a diversifying strategy. For more on futures products for the mainstream market, see the June 16th issue of Opalesque Futures Intelligence.
For instance, RWC Partners announced that it raised $330 million on the first day for two new funds, both vehicles for investing in large-cap US stocks. One, RWC US Absolute Alpha, is a UCITS III vehicle. RWC Partners manages over $2 billion in various UCITS funds, out of total assets of $3.5 billion.
York Capital reportedly raised over $100 million for a UCITS Fund launched at the end of July on a Bank of America Merrill Lynch platform dedicated to these products. The new vehicle, which pursues the same event-driven strategies as York's multi-strategy hedge fund, is marketed in Britain, France, Spain, Italy and Ireland. York has total assets of $10.5 billion.
Other managers that are following the UCITS route include Cheyne Capital, Brevan Howard, Marshall Wace and Kairos Partners.
As Mr. Clarke pointed out, investors now desire greater transparency and liquidity and are attracted to regulated hedge fund products that have these qualities. No wonder so many managers are starting UCITS funds.