Man increases hedge fund sales by $1bn

The dire performance of equity markets has encouraged wealthy savers to seek alternative investment products and contributed to a $1bn (£650m) increase in sales of hedge funds by Man Group, the UK's largest alternative asset manager.

Harvey McGrath, Man's chairman, told its annual meeting yesterday that funds under management had surged again in the past three months.

Man now looks after $20bn of savings, after launching two new hedge funds in June. Mr McGrath said: "The increased level of group funds under management will continue to underpin a significantly higher rate of management fee income than last year."

Hedge funds, which can use derivative products and short-selling techniques to make money from shares even when markets are falling, have increased in popularity throughout the bear market.

Man said the performance of its funds had been "particularly strong recently", after a period of under-performance at the start of the year. AHL, its major brand in the US, recorded average returns of 10.8 per cent in the three months to the end of June.

The news sent Man shares up 9.5p to 1,099.5p and allowed analysts to upgrade their forecasts for performance fees this year. Philip Middleton of Merrill Lynch said: "The most recent global fund launch, AP Strategic 2, was below expectations at $140m, but this was more than offset by other retail launches, including strong open-end sales, and good inflows from the company's various joint ventures. This outcome underlines our view that Man's retail marketing machine is a significant source of competitive advantage for the company."

The trading statement added that Man's brokerage division is also performing in line with expectations and that the integration of RMF, the Swiss hedge fund manager Man bought for $833m in May, "has commenced smoothly".