Interim Management Statement

RNS Number : 7766Z

Man Group plc

20 January 2011

 



20 January 2011

 

MAN GROUP PLC

INTERIM MANAGEMENT STATEMENT - THIRD QUARTER ENDED 31 DECEMBER 2010

·     Funds under management (FUM) at 31 December 2010 of $68.6 billion
(30 September 2010: $40.5 billion with the GLG acquisition adding $25.4 billion)

·     Growth in FUM at AHL, GLG and Man Multi-Manager, with positive investment returns generating an additional $2.8 billion for investors

o  AHL Diversified plc up 14.8% in 2010

o  Man-IP220 up 22.3% in 2010

o  Strong performance across the board at GLG, with double digit returns in GLG Atlas Macro, GLG Emerging Markets, GLG European Distressed, GLG Market Neutral, GLG Global Opportunity, GLG North American Opportunity and the long only GLG Performance Fund 

·     AHL was 3.7% below peak on a weighted average basis on 31 December 2010,
with 75% of FUM at or within 5% of peak

·     Positive net flows of $0.1 billion in alternative funds, with demand for GLG and AHL in
open-ended formats

·     Net outflow of $1.1 billion in long only funds, reflecting a single redemption of over $1.0 billion from a low margin mandate, as the investor switched out of European equities.  Inflows in the long only business are at higher margins than outflows.   

 Peter Clarke, Chief Executive, said:

"Investment performance has been the principal driver of asset growth in the final quarter of the calendar year, delivering impressive returns for 2010 as a whole and a solid backdrop for 2011. The quarter saw positive flows into alternative styles, but a single large redemption resulted in an outflow from lower margin long-only funds.

"The sales pipeline is strong across the business.  As expected, performance is driving investor demand first in open-ended funds, with our integrated marketing campaigns focusing on emerging markets, global macro and equity long/short funds, as well as managed futures.  GLG UK Alpha Select UCITS was re-opened briefly to new investors and raised an additional $240 million. Our most recent guaranteed product, Man Synergy, started trading on 1 January 2011 at $350 million, indicating some pick-up in private investor demand for structured product. The new Man IP220 GLG product, which combines AHL managed futures with the multi-strategy GLG Global Opportunities fund, will start marketing at the end of this month.  The institutional sales outlook is positive, with a major European managed account mandate for at least $1.5 billion expected to conclude in February for funding over the year.      

"The GLG integration process has gone very well, with cost synergies on track and a sales pipeline which provides support for strong revenue synergies to develop.  We have also established a new venture, Man Systematic Strategies, to develop quantitatively-based investment ideas using the combined expertise of Man and GLG. Two new products will be launched from this initiative very shortly.

"With strong performance and a clear marketing focus for new and existing investment ideas, there is significant momentum for the business in the year ahead."

Conference call details

Peter Clarke (Chief Executive) and Kevin Hayes (Finance Director) will host a conference call for investors and analysts at 08:45 UK time this morning. 

UK Access Number                + 44 (0)20 3140 0723
UK Toll Free Number              0800 368 1917

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THIRD QUARTER COMMENTARY

Investment performance

Investment performance was the major source of asset growth in the third quarter, with AHL, GLG and the Multi-Manager all making positive contributions. 

AHL Diversified plc was up 5.3% in the three months to 31 December 2010, to give a calendar year return of 14.8%.  AHL was 3.7% below peak on a weighted average basis at 31 December, with 75% of FUM at or within 5% of peak. Metals and commodity-based currencies were the most profitable positions in the quarter.  

Performance across the range of GLG alternative styles was strong, with GLG Alpha Select,  GLG Market Neutral, GLG Multi-Strategy, GLG Atlas Macro, GLG Emerging Currency and Fixed Income and GLG European Distressed all nominated for the forthcoming 2010 Eurohedge awards.  Positive investment movement in long only funds in the quarter was driven in particular by strong performance in GLG Japan Core Alpha (up 11.9%). 

Man Multi-Manager also delivered positive performance in the third quarter, driven by its managed futures and global macro strategies, with institutional flagship fund of funds Man Absolute Return Strategies and Man Dynamic Selection up 3.6% and 3.9% respectively. Man IP 220, the flagship retail structured product, finished the calendar year up 22.3%.

Asset flows

Man saw a net inflow of $0.1 billion into alternative funds in the third quarter.  As expected, demand is strongest for open-ended formats, which generated an inflow of $1.0 billion.  Both AHL and GLG alternatives saw positive flows, with the majority coming from GLG. 

Guaranteed products saw net outflows of $0.6 billion - similar to the previous quarter.  However, there are early signs of an increase in investor interest in guaranteed formats, with $350 million from the Q3 launch of Man Synergy included in FUM from 1 January 2011. 

There was a small net outflow of $0.3 billion in institutional fund of funds, although the near term outlook remains positive.  Man has been in exclusive negotiations with a major European institutional client to set up a bespoke managed account platform to manage in excess of $1.5 billion.  The transaction is expected to be finalised in February and to fund over the next 10 months.  Institutional quarterly redemptions confirmed on 1 January 2011 were around $400 million.   

Long only funds saw a $1.1 billion outflow in the third quarter, driven principally by a single redemption of over $1 billion of a low margin mandate, as the investor switched out of European equities.  Inflows in the long only business are at higher margins than outflows.    

SETTLEMENT OF MF GLOBAL CLASS ACTION

In Man's 2010 Annual Report (Note 23 - Contingent Liabilities), Man disclosed a class action lawsuit filed against Man Group plc, MF Global and other parties which alleged that the prospectus for MF Global's initial public offering in July 2007 contained false and misleading statements concerning risk management and trading risk controls at MF Global.  After a process of mediation, this lawsuit has now been settled with no admission of liability and subject to the approval of the US federal court.  Man Group will contribute $32.5 million to the total settlement of $90 million.  The settlement will be recorded in Man's income statement for financial year 2011, within discontinued operations.

FINANCIAL POSITION

Man's financial position remains strong, with a regulatory capital surplus of around $300 million and over $1.8 billion in cash on 31 December 2010.

FUNDS UNDER MANAGEMENT ANALYSIS

3 months to 31 December 2010 $bn
	Guaranteed	Open-ended alternative	Institutional FoF and other2	Alternatives total	Long only	Total
FUM at 30 September 2010	14.8	13.2	12.5	40.5	-	40.5
Acquired 14 October 20101	-	11.5	0.7	12.2	13.2	25.4
Sales	-	2.6	0.3	2.9	1.2	4.1
Redemptions	(0.6)	(1.6)	(0.6)	(2.8)	(2.3)	(5.1)
Net inflows/(outflows)	(0.6)	1.0	(0.3)	0.1	(1.1)	(1.0)
Investment movement	0.3	1.0	0.3	1.6	1.2	2.8
FX	0.2	(0.1)	-	0.1	-	0.1
Other	0.6	0.1	0.1	0.8	-	0.8
FUM at 31 December 2010	15.3	26.7	13.3	55.3	13.3	68.6

1) GLG data as at acquisition close on 14 October 2010

2) Includes Pemba/Ore Hill and Man Convertibles ($3.1 billion and $1.2 billion at 31/12/2010; $3.2 billion and $1.1 billion at 30/09/2010)

FUNDS BY MANAGER

	31 December 2010  $bn	30 September 20101  $bn
AHL	23.6	22.5
GLG
Long only	13.3	13.2
Alternatives
- Equity	7.9	7.0
- Credit and Convertibles2	6.0	6.1
- Emerging markets	2.6	2.4
- Macro and special situations	0.5	0.3
Multi-Manager	14.7	14.4
Total	68.6	65.9

1) GLG data as at acquisition close on 14 October 2010

2) Includes Pemba/Ore Hill and Man Convertibles ($3.1 billion and $1.2 billion at 31/12/2010; $3.2 billion and $1.1 billion at 30/09/2010)

INVESTMENT PERFORMANCE

	Total return		Annualised return
	3 months to 31 Dec 10	Calendar year to 31 Dec 10	3 years to 31 Dec 10	5 years to 31 Dec 10
Fund of funds
Man Absolute Return Strategies*1	3.6%	7.1%	0.3%	3.8%
Man Dynamic Selection*2	3.9%	7.8%	2.2%	5.9%
Structured - principal protected
Man-IP 220*3	3.2%	22.3%	3.7%	6.8%
Man AHL Diversified plc4	5.3%	14.8%	8.3%	10.1%
Ore Hill*5	1.7%	27.1%	1.1%	3.7%
GLG Alternative
GLG Alpha Select Fund*6	0.1%	6.6%	13.6%	12.2%
GLG Atlas Macro Fund*7	-2.5%	25.3%	n/a	n/a
GLG Global Convertible Fund8	3.4%	6.0%	2.9%	4.7%
GLG Emerging Markets Fund*9	2.3%	12.6%	-1.2%	18.3%
GLG European Distressed Fund*10	-0.4%	36.0%	n/a	n/a
GLG European Long Short Fund*11	4.1%	8.0%	2.9%	8.1%
GLG European Opportunity Fund*12	1.0%	5.2%	9.2%	10.8%
GLG Market Neutral Fund*13	4.6%	34.0%	4.7%	10.4%
GLG Global Opportunity Fund*14	2.2%	10.6%	0.4%	6.7%
GLG North American Opportunity Fund*15	6.8%	15.1%	7.6%	5.7%
GLG Long only
GLG Japan Core Alpha Equity Fund17	11.9%	3.6%	-6.3%	n/a
GLG Performance Fund18	10.1%	10.3%	-8.9%	1.1%
Indices
World stocks (total return)19	9.1%	12.3%	-4.3%	3.0%
World bonds20	-2.2%	3.4%	4.5%	4.4%
Corporate bonds21	-2.9%	12.4%	8.0%	5.9%
Hedge fund indices
HFRI Fund Weighted Composite Index22	5.5%	10.4%	2.4%	5.9%
HFRI Fund of Funds Composite Index22	3.4%	5.5%	-2.6%	2.4%

Investment performance (continued)

	Total return		Annualised return
	3 months to 31 Dec 10	Calendar year to 31 Dec 10	3 years to 31 Dec 10	5 years to 31 Dec 10
Style indices
Barclay CTA Index*	2.7%	5.4%	6.3%	6.0%
HFRI Equity Hedge (Total) Index22	6.6%	10.4%	0.3%	4.5%
HFRI Event Driven (Total) Index22	4.8%	11.8%	3.0%	6.1%
HFRI Macro (Total) Index22	5.0%	8.4%	5.8%	7.3%
HFRI Relative Value (Total) Index22	3.5%	11.8%	4.9%	7.1%

Source: Man database and Bloomberg. There is no guarantee of trading performance and past or projected performance is not a reliable indicator of future performance. Returns may increase or decrease as a result of currency fluctuations. 

* December 2010 return is an estimate

1) Represented by Man Absolute Return Strategies II - Class ARS2I1

2) Represented by Man Dynamic Selection - Class ISI12.

3) Represented by Man-IP 220 Ltd from 18 December 1996 to 31 December 2005 and Man-IP 220 Ltd - USD class bonds from 1 January 2006.

4) Man AHL Diversified plc is valued weekly, but for comparative purposes the last weekly valuation of the month has been used.  

5) Represented by Ore Hill International II Ltd.

6) Represented by GLG Alpha Select - Class C

7) Represented by GLG Atlas Macro Fund - Class A - USD Shares

8) Represented by GLG Global Convertible Fund - Class A - USD Shares

9) Represented by GLG Emerging Markets Fund Class A Res to Unres (31/08/2007)

10) Represented by GLG European Distressed Fund - Class A - USD Shares

11) Represented by GLG European Long Short Fund - Proforma - Class D - Institutional

12) Represented by GLG European Opportunity Fund - Proforma - Class D- Institutional 

13) Represented by GLG Market Neutral Fund - Proforma - Class Z

14) Represented by GLG Global Opportunity Fund - Class A - USD Shares

15) Represented by GLG North American Opportunity Fund - Proforma

16) Represented by GLG European Alpha Alternative UCITS Fund - Class C - EUR Shares

17) Represented by GLG Japan Core Alpha Equity Fund - Class C to Class AAX-(JPY)

18) Represented by GLG Performance Fund Class A - Institutional

19) Represented by MSCI World (total return) Index USD 

20) Represented by Citigroup World Government Bond Index hedged to USD (Total return)

21) Represented by Citigroup High Grade Corp Bond TR

22) HFRI index performance over the past 4 months is subject to change.

Enquiries

Miriam McKay

Head of Investor Relations and Financial Communications

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David Waller

Head of Media Relations

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About Man

Man is a world-leading alternative investment management business. It has expertise in a wide range of liquid investment styles including managed futures, equity, credit and convertibles, emerging markets, global macro and multi-manager, combined with powerful product structuring, distribution and client service capabilities. Man manages $68.6 billon.

The original business was founded in 1783. Today, Man Group plc is listed on the London Stock Exchange and is a member of the FTSE 100 Index with a market capitalisation of over £5.5 billion.

Man Group is a member of the Dow Jones Sustainability World Index and the FTSE4Good Index. Man also supports many awards, charities and initiatives around the world, including sponsorship of the Man Booker literary prizes. Further information can be found at www.mangroupplc.com.

Forward looking statements and other important information

This document contains forward-looking statements with respect to the financial condition, results and business of Man Group plc. By their nature, forward looking statements involve risk and uncertainty and there may be subsequent variations to estimates. Man Group plc's actual future results may differ materially from the results expressed or implied in these forward-looking statements.

The content of the websites referred to in this announcement is not incorporated into and does not form part of this announcement.

Nothing in this announcement should be construed as or is intended to be a solicitation for or an offer to provide investment advisory services.

 

END

 

 

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