Man Group PLC on Tuesday reported a drop in assets over the first half as its Long-only funds were pummelled in a ‘volatile market environment’.
Shares in the London-based hedge fund manager were down 4.3% in London on Tuesday at 256.20 pence each.
At June 30, assets under management totalled $142.3 billion, sliding from $148.6 billion six months earlier.
Man recorded net inflows of $3.2 billion, with its Alternative funds securing $4.8 billion of inflows, offsetting $1.6 billion in outflows from its Long-only funds.
The drop in assets came from a $4.9 billion negative investment performance, with its Long-only funds sinking $7.0 billion, which wiped away the $2.1 billion gains made in Alternative.
‘Bond markets recorded their worst six-month period since records began in 1900, while the S&P 500 recorded its worst first half since 1970, resulting in the toughest six month period for a traditional 60-40 portfolio since 1932,’ the firm explained.
A 60-40 portfolio refers to a strategy that allocates 60% to stocks and 40% to bonds.
Man added: ‘Our total return and long-only strategies were impacted significantly by market beta, with overall investment performance of negative 6.9% and negative 13%, respectively. AHL TargetRisk performance, negative 15%, reflected its long-only exposure to fixed income and equity markets.
‘Investment performance in our systematic long-only strategies was negatively impacted by broad exposure to global equities and while performance in our discretionary long-only strategies was more mixed overall, GLG Continental Europe, negative 27%, suffered in particular as a result of its growth-bias.’
In the second quarter alone, Long-only booked $1.7 billion in outflows and a $5.1 billion negative investment performance.
‘The first half of 2022 was yet another strong period for Man Group. Amidst a volatile market environment, we delivered for our clients and shareholders alike, demonstrating the value that active, uncorrelated investment strategies and solutions can bring to portfolios,’ Chief Executive Luke Ellis said.
‘Strong performance from our absolute return strategies, positive alpha from our long only strategies, net inflows 2.7% ahead of the industry, and a 28% increase in core earnings per share reflect the quality of our people, the benefit of our technology, and the attractiveness of our differentiated business model.’
Man declared an interim dividend of 5.6 US cents, which is unchanged on the prior year.
Pretax profit in the six months to June 30 rose to $380 million from $280 million, as core net revenue rose to $855 million from $728 million. Core net management fee revenue increased to $469 million from $417 million, with performance fees rising to $404 million from $284 million.
Ellis added: ‘We enter the second half with high performance fee potential and a good level of client engagement. While we expect some volatility in flows in the near term, as clients access liquidity and rebalance their portfolios due to market movements, we remain focused on the long term. We are confident that our diversified range of investment strategies and continued focus on alpha generation position us well for future growth.’
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