Man Group, the largest quoted hedge fund group in the world, has shrugged off the turbulent market conditions that have seen rivals wind up funds or close down altogether, as it revealed it would beat profit expectations for the year.
The FTSE 100-listed group's shares rose almost 4 per cent yesterday, as it said pre-tax profits would beat the consensus analyst forecast of $1.82bn in its full year results announced at the end of May. The previous year, Man posted profits of $1.3bn, but Citigroup estimates that this year profits could hit $2bn.
The rise in profits was predominantly driven by a growth in fees, the group said. Management fees have increased 15 per cent over the year, driven by the performance and growth of its funds. The alternative asset manager added that it had lifted its assets under management from $62bn to $75bn in the past 12 months.
The market had been concerned that Man could see investors withdrawing funds at a similar level to the third quarter "but these proved unfounded", Haley Tam, an analyst at Citigroup, said.
Man chief executive Peter Clarke lauded what he called a "very strong set of results, achieved through a period of significant market turmoil". "Our financial strength, strategic focus and strong performance mean that Man is well placed to see continued strong growth," he added.
The group said there had been good performance across a range of products and picked out its AHL Diversified hedge fund as the stellar performer. The $3bn fund, which specialises in managed futures "has been hitting a number of high water marks in recent months and has benefited from the current volatile market conditions," Michael Long, an analyst at Keefe, Bruyette and Woods, said.
Man's news came as a welcome tonic for hedge fund investors, after a month that has seen the credit crisis leave a trail of havoc throughout the industry. Last month saw the collapse of the $2bn flagship fund of Peloton Partners, the hedge fund set up by former Goldman Sachs partners. Sailfish Capital Partners and Focus Capital in the US have also wound up funds. This was followed by the collapse of Carlyle Capital Corporation and Pentagon Capital.
Man Group, which celebrates its 225th anniversary this year, floated on the London Stock Exchange in 1994. The group spun out the brokerage last year in a listing on the New York Stock Exchange as MF Global, in a move that raised $2.9bn.Reuse content