Investors pile into £460m Man fund

Man Group, the world's largest quoted hedge fund manager, has raised $725m (£460m) for its biggest fund, in another sign of the increasing popularity of alternative investments.

The size of the demand for the new Man "fund of funds", mainly from wealthy private individuals, was twice the level analysts had been expecting. It sent Man shares up 22p to 1,012.5p yesterday, making it one of the best performers in the FTSE 100.

The new fund takes Man's assets under management to more than $26bn. Called the Man Multi-Strategy Series 5, the fund invests in a range of different styles of hedge funds.

The dire performance of equity markets has encouraged wealthy savers to seek alternative investment products. Hedge funds are able to practice short-selling to make money on shares going down. So-called "funds of funds" are often recommended by financial advisers as the safest way of investing in hedge funds. In a nod to the prevailing mood of investment caution and tales of large losses on some individual funds, Series 5 guaranteed investors 100 per cent of their capital back in 2015 and also was the first Man product to offer a choice of capital or income bonds.

Another similar product will be launched this month, with three more later in the year. Demand for the latest fund beat that for its predecessor, Series 4, which raised $700m last October.

Stanley Fink, Man's chief executive, said: "The record $725m raised for this product at a time of global uncertainty serves to emphasise the quality of our business across the range of investment management, product design and distribution."

The success of Man stands in stark contrast to the performance of traditional fund managers. UBS Warburg's Sarah Ing said of Series 5: "The sales figure is nearly twice the level we had expected. It shows the continued demand for the type of hedge fund product Man sells."