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Man Group's Funds under management decline to $112.7bn in Q3 while still up 4% YTD

Friday, October 11, 2019
Opalesque Industry Update - British hedge fund manager Man Group reported funds under management (FUM) of $112.7 billion at 30 September 2019, down from $114.4 billion at the end of June, after net outflows of $1.1 billion and currency losses of $1.3 billion more than offset investment gains of $700 million.

$150 million Tier 2 notes redeemed on 16 September 2019 with an annualised interest saving of approximately $4.5 million. Completion of the $100 million share repurchase announced in 2018 earlier this month, bringing the total amount repurchased since 2014 to $0.7 billion.

Intention to repurchase up to $100 million of shares; we will continue to review further potential acquisition opportunities, it said.

Luke Ellis, Chief Executive Officer of Man, said: "In the third quarter, we saw a continuation of the trends experienced in the first half of the year with strong absolute performance and inflows into our quant alternative strategies, and outflows from our long only equity strategies. FX moves were negative in the quarter, which led to an overall dip in FUM to $112.7 billion, but year to date assets are up 4%.

As we look ahead, we are encouraged by our good performance fee earning potential, although uncertain economic conditions mean the outlook for flows remains mixed. The diversified nature of the business means that we remain well positioned and, given our continued strong cash generation, we are pleased to announce a further return of capital."

In the three months to 30 September 2019, FUM decreased 1% to $112.7 billion driven by net outflows of $1.1 billion (comprising sales of $6.6 billion and redemptions of $7.7 billion) and negative FX and other movements of $1.3 billion, partially offset by positive investment movement of $0.7 billion.

Absolute return FUM increased by $0.4 billion in the quarter. Flows were broadly flat, with inflows into AHL Institutional Solutions and AHL Alpha offset by outflows from Man GLG's equity and credit strategies. Positive investment movement of $0.6 billion was driven by positive performance at Man AHL (Dimension +2.8%, Alpha +4.1% and Diversified +5.9%). Negative FX and other movements of $0.1 billion were driven by the US dollar strengthening against the Australian dollar and the euro, partially offset by positive leverage movements. As we have previously indicated, the management fee margin in this category continues to decline due to the ongoing mix shift towards institutional assets, which are at a lower margin. As at 30 September 2019: 72% of Man AHL performance fee eligible FUM was at or above high watermark ($13.3 billion of which crystallises in the second half of the year) and 20% was within 5% of high watermark; 36% of Man GLG performance fee eligible FUM was at or above high watermark and 34% was within 5% of high watermark.

Total return FUM increased by $0.4 billion during the quarter. Net flows of $0.6 billion included inflows into diversified risk premia and TargetRisk strategies, partially offset by outflows from the EM debt total return strategy. The investment movement of $0.3 billion was driven by positive performance in diversified risk premia and TargetRisk strategies. FX and other movements of negative $0.5 billion were due to the US dollar strengthening against sterling and the euro.

Multi-manager solutions FUM increased to $13.9 billion during the quarter. Net inflows of $0.2 billion comprised flows into segregated portfolios. Positive investment performance contributed $0.2 billion. The management fee margin in this category continues to decline due to the continued mix shift towards managed account mandates and the decline in legacy fund of fund assets.

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