Man Group shrugged off weak equity and turbulent energy markets over the summer to deliver a surprisingly strong update on recent trading yesterday.
Estimated sales of $10.4bn during the six months to the end of September, split evenly between institutional investors and very rich individuals, dwarfed the $3.7bn Man managed over the same period last year and outstripped even the most optimistic City forecast.
Redemptions of $3.6bn compared with $2.5bn last year and leave Man, the world's largest listed hedge fund manager, with about $56bn under management.
Management fees climbed 35 per cent, profits from the Man Financial brokerage operation were 40 per cent higher and better than ever, and the group now expects to make more profits before tax for the first half of its financial year than the $691m predicted by analysts. The City applauded yesterday's update and Man shares advanced 4.75p to 448p, valuing the group at £8.5bn.
Credit Suisse, Man's broker, lifted profits forecasts, again told clients it thought the shares would outperform the wider market and raised its target price for them to 500p from 467p.
Another broker, Bridgewell Securities, declared the trading update "very bullish" with all revenue lines ahead of expectations.
Earlier this month Stanley Fink, the man who orchestrated the London-based group's ascendancy to the pinnacle of the controversial hedge fund industry over the past two decades, announced that he would step down as chief executive. Peter Clarke, the finance director, was named his successor.
Man's fortunes have soared in line with the wider hedge fund industry. Hedge funds deploy a wider range of investment strategies across a broader range of markets - from currencies to commodities to shares - than traditional long-only fund managers.
That flexibility has seen them deliver far more generous returns, even in declining markets, that have attracted ever-increasing investment from pension funds, big City investors and the very rich.
Hedge funds are now estimated to account for about 40 per cent of all trading in London on any given day.
The industry has struggled, however, to fully shed its reputation as the bogeyman of the financial world, a reputation first earned by the legendary attack on the Bank of England in 1992 by the speculator George Soros that forced Britain out of the exchange rate mechanism and cost taxpayers £4bn. Black Wednesday is still known in Mr Soros' firm as White Wednesday.
In 1998, the hedge fund world was dealt a further public relations disaster by the collapse of America's Long Term Capital Management.Reuse content