Q3 Interim Management Statement

RNS Number : 7034Q

Man Group plc

17 October 2013

 



Press release

17 October 2013

INTERIM MANAGEMENT STATEMENT for the quarter ended 30 September 2013

Key points

·     Funds under management (FUM) at 30 September 2013 of $52.5 billion (30 June 2013: $52.0 billion)

·     Net inflows in the quarter of $0.7 billion, comprising sales of $4.1 billion and redemptions of $3.4 billion with net inflows into GLG alternatives and long only funds being partially offset by net outflows from AHL and FRM funds

·     Overall investment movement of negative $0.1 billion in the quarter:

o  The majority of GLG alternative strategies had positive performance in the quarter,  adding $0.3 billion to FUM

o  GLG long only strategies contributed positive investment movement of $0.4 billion in the quarter with the Japan Core Alpha fund up 4.4% and the Global Equity fund up 7.4%

o  AHL Diversified programme was down 6.6% in the quarter which was the main driver of the negative investment movement of $0.5 billion in Quant strategies

o  Performance at FRM was negative overall which reduced FUM by $0.3 billion in the quarter

·     FX movements of positive $1.2 billion in the quarter, driven by the weakening of the US dollar against the Euro and Sterling

·     Other negative movements of $1.3 billion driven by guaranteed product degears of $1.0 billion and product maturities and other movements of $0.3 billion

·     Previously announced cost savings programmes remain on track

Manny Roman, Chief Executive Officer of Man, said:

"The net inflow in the quarter was driven by institutional flows into discretionary alternatives and long only strategies. Inflows were linked primarily to stronger performance in the first half of the year and were characterised by sizeable asset flows from certain customers, albeit into relatively low margin products.  

The equity rally in July, followed by a sell-off in August, and volatility in financial markets in September provided challenging market conditions for hedge funds, and in particular CTAs.  As a result performance in the majority of the AHL and FRM strategies was negative in the quarter, although performance at GLG overall was positive.

Despite better flows in the third quarter we remain cautious in our outlook for asset flows going forward in the light of continued uncertainty in the macro-economic environment. "

Conference call

A conference call for investors and analysts will be held at 08:00 UK time this morning. 

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THIRD QUARTER COMMENTARY

Alternatives

Funds under management in alternative strategies remained broadly flat in the period.

The 4% reduction in quant alternatives (AHL/MSS) FUM was driven by a combination of negative investment movement and net outflows, partly offset by FX movements. Sales of $0.4 billion included $0.2 billion into AHL Evolution. The majority of the redemptions of $0.7 billion continued to be from retail investors in the Asia Pacific region. The AHL Diversified programme was down 6.6% in the quarter which was the main driver of the negative investment movement of $0.3 billion as losses in fixed income and currencies were only partially offset by gains in stocks over the period. FX movements (mainly related to the weakening of the US dollar against the Euro) increased FUM by $0.2 billion. At 30 September 2013, AHL open ended funds were approximately 17.7% below high water mark on a weighted average basis.

Funds under management in discretionary alternatives (GLG) increased by 9% in the period to $15.3 billion. Sales of $1.6 billion were driven by flows into equity long short and credit and convertibles strategies and included a lower margin $0.4 billion US CLO launch. Redemptions of $0.7 billion were from both institutional and retail investors in the UK and Europe and were across a range of strategies. The majority of GLG's range of alternative investment styles showed positive performance in the quarter and 74% of GLG performance fee eligible FUM was at high watermark and 15% was within 5% of high water mark at the end of September. FX movements increased discretionary alternatives FUM by $0.2 billion mainly due to the weakening of the US Dollar against the Euro. Included in other movements is $0.2 billion of amortisation of European CLO assets.

Funds under management in the alternatives fund of fund category (FRM) reduced to $11.4 billion.  Sales were muted at $0.3 billion whilst redemptions of $1.0 billion were across a range of products. Investment performance across the suite of FRM products was mixed and led to to an overall negative movement of $0.2 billion. Positive FX movement of $0.2bn was driven by the weakening of the US Dollar against the Euro, Japanese Yen and Sterling. Notified quarterly redemptions for 1 October were $0.5 billion.

Long only

Discretionary long only FUM increased by 18% driven by strong sales, positive performance and FX movements. Sales of $1.8 billion were mainly into Japan CoreAlpha, $0.7 billion of which came from two lower margin institutional mandates. Redemptions totalled $0.7 billion, $0.6 billion from Japan CoreAlpha and $0.1 billion from other long only strategies. Japan CoreAlpha was up 4.4% in the quarter adding $0.3 billion to FUM and other long only styles were up on average over 7% contributing $0.1 billion of investment movement in the quarter. FX movements increased FUM in the period by $0.4 billion driven by the weakening of the US dollar against sterling.

The MSS Europe plus strategy was up 8.9% in the quarter which increased FUM in the long only quant category by $0.1 billion and FX movements due to the weakening of the US dollar against the Euro added another $0.1 billion to FUM.  

Guaranteed products

Guaranteed product funds under management decreased by $1.7 billion in the quarter to $3.0 billion. There were no guaranteed product launches and redemptions were $0.3 billion, in line with the previous quarter. Negative AHL performance was the main driver of the negative investment movement of $0.4 billion. The routine rebalancing of investment exposure in guaranteed products drove a degear of $1.0 billion, with AHL down 7.24% in the rebalancing period and there was a further degear of $0.2 billion on 1 October.There were guaranteed product maturities of $0.1 billion in the quarter.

THIRD QUARTER COMMENTARY (continued)

Cost savings

Previously announced cost savings programmes remain on track. Total restructuring charges relating to the additional cost saves announced on 2 August 2013 are approximately $90 million pre-tax and will be recognised in H2 2013.  In August, Man entered into a contract to sub-let a significant portion of its existing office space in Riverbank House (our main London office and headquarters). This will result in a restructuring charge of approximately $60 million, comprising lease provisions and write offs of leasehold improvements and equipment assets. Other charges of approximately $30 million relate to redundancy provisions.

FUNDS UNDER MANAGEMENT ANALYSIS

FUM movements by product type

$bn	FUM at 30 June 2013	Sales	Redemptions	Net inflows / (outflows)	Investment movement	FX	Other	FUM at 30 September 2013
Alternative	35.6	2.3	(2.4)	(0.1)	(0.2)	0.6	(0.2)	35.7
Quant (AHL / MSS)	9.4	0.4	(0.7)	(0.3)	(0.3)	0.2	-	9.0
Discretionary (GLG)	14.1	1.6	(0.7)	0.9	0.3	0.2	(0.2)	15.3
Fund of funds (FRM)	12.1	0.3	(1.0)	(0.7)	(0.2)	0.2	-	11.4
Long only	11.7	1.8	(0.7)	1.1	0.5	0.5	-	13.8
Quant (AHL / MSS)	1.4	-	-	-	0.1	0.1	-	1.6
Discretionary (GLG)	10.3	1.8	(0.7)	1.1	0.4	0.4	-	12.2
Guaranteed	4.7	-	(0.3)	(0.3)	(0.4)	0.1	(1.1)	3.0
Total	52.0	4.1	(3.4)	0.7	(0.1)	1.2	(1.3)	52.5

FUM by manager

$bn	30 September 2013	30 June 2013	31 March 2013
Quant styles	12.5	13.9	16.3
-     AHL	10.2	11.6	14.1
-     MSS	2.3	2.3	2.2
GLG Alternatives	15.5	14.2	14.2
- Equity
-     Europe	3.4	3.1	3.2
-     North America	2.0	1.6	1.7
-     UK	0.5	0.6	0.6
-     Other equity alternatives	1.0	0.7	0.4
- Credit and Convertibles
-     Convertibles	3.2	3.0	2.9
-     Market Neutral	0.8	0.9	0.9
-     US credit (Ore Hill)	1.3	0.9	0.9
-     European CLO (Pemba)	2.0	2.1	2.2
- Macro
-      Emerging markets	0.7	0.7	0.9
-      Macro	0.6	0.6	0.5
Long only	12.2	10.3	9.9
-     Japan	8.4	7.0	6.1
-     Other	3.8	3.3	3.8
FRM	12.3	13.6	14.4
Total	52.5	52.0	54.8

FUM movements by manager

$bn	FUM at 30 June 2013	Sales	Redemptions	Net inflows / (outflows)	Investment movement	FX	Other	FUM at 30 September 2013
AHL/MSS	13.9	0.4	(0.9)	(0.5)	(0.5)	0.3	(0.7)	12.5
GLG	24.5	3.4	(1.5)	1.9	0.7	0.8	(0.2)	27.7
FRM	13.6	0.3	(1.0)	(0.7)	(0.3)	0.1	(0.4)	12.3
Total	52.0	4.1	(3.4)	0.7	(0.1)	1.2	(1.3)	52.5

Investment performance

	Total return		Annualised return
	3 months to 30 Sep 2013	9 months to 30 Sep 2013	3 years to 30 Sep 2013	5 years to 30 Sep 2013
AHL/MAN SYSTEMATIC STRATEGIES
AHL Diversified1	-6.6%	-8.5%	-3.8%	0.0%
AHL Alpha2	-4.7%	-6.3%	-2.5%	n/a
AHL Evolution3	-0.1%	4.5%	n/a	n/a
AHL Dimension4	-0.4%	1.0%	0.3%	3.3%
MSS TailProtect5	-4.9%	-11.8%	n/a	n/a
MSS Europe6	8.9%	12.9%	n/a	n/a
GLG ALTERNATIVES
Equity
Europe
GLG European Long Short Fund7	2.6%	7.4%	8.2%	8.9%
GLG European Equity Alternative UCITS Fund8	2.3%	7.4%	n/a	n/a
GLG European Alpha Alternative UCITS Fund9	2.0%	6.5%	4.5%	n/a
North America
GLG North American Opportunity Fund10	7.1%	7.9%	2.6%	6.4%
GLG North American Equity Alternative UCITS Fund11	5.7%	5.0%	n/a	n/a
UK
GLG Alpha Select Fund12	0.9%	9.1%	-0.4%	5.5%
GLG Alpha Select UCITS Fund13	0.9%	8.5%	-1.0%	n/a
Other equity alternatives
GLG Global Opportunity Fund14	0.5%*	3.5%*	-1.0%*	2.3%*
Credit and convertibles
Convertibles
GLG Global Convertible Fund15	2.7%	6.6%	4.1%	7.9%
GLG Global Convertible UCITS Fund16	3.8%	8.9%	5.6%	7.8%
Market Neutral
GLG Market Neutral Fund17	2.9%*	6.9%*	10.0%*	15.2%*
GLG European Distressed Fund18	0.9%*	6.0%*	6.9%*	n/a
Ore Hill
GLG Ore Hill Fund19	-0.1%*	2.8%*	6.2%*	7.8%*
Emerging markets
GLG Emerging Markets Fund20	-6.2%	-6.5%	-5.0%	2.9%
GLG Emerging Markets UCITS Fund21	-6.0%	-6.5%	-5.4%	n/a
Macro and special situations
GLG Atlas Macro Fund22	-10.1%	-3.6%	-2.2%	n/a
GLG Atlas Macro Alternative UCITS Fund23	-8.5%	-2.3%	-3.4%	n/a
GLG LONG ONLY
GLG Japan Core Alpha Equity Fund24	4.4%	47.6%	15.3%	5.9%
GLG Global Equity UCITS Fund25	7.4%	21.2%	10.6%	5.5%

Investment performance continued

	Total return		Annualised return
	3 months to 30 Sep 2013	9 months to 30 Sep 2013	3 years to 30 Sep 2013	5 years to 30 Sep 2013
FRM
AA Diversified26	-1.4%	0.8%	0.8%	0.6%
FRM Diversified II27	-0.4%	2.7%	2.0%	1.6%
FRM Dynamic Selection28	0.1%*	1.4%*	0.1%*	1.5%*
Man GLG Multi-Strategy Fund29	-1.2%*	3.9%*	2.3%*	4.3%*
Indices
World stocks30	6.4%	18.8%	12.1%	7.7%
World bonds31	0.7%	0.1%	2.6%	4.1%
Corporate bonds32	-0.3%	-8.2%	5.2%	11.4%
Hedge fund indices
HFRI Fund Weighted Composite Index33	2.2%	5.8%	3.9%	5.1%
HFRI Fund of Funds Composite Index33	1.8%	5.4%	2.6%	2.0%
HFRX Global Hedge Fund Index	1.1%	4.3%	0.5%	0.4%
Style indices
Barclay BTOP 50 Index34	-2.7%	-2.3%	-1.4%	0.4%
HFRI Equity Hedge (Total) Index33	4.0%	10.4%	5.1%	5.5%
HFRX Equity Hedge Index	2.0%	6.7%	-1.1%	-0.8%
HFRI EH: Equity Market Neutral Index33	0.9%	3.7%	2.2%	1.1%
HFRX EH: Equity Market Neutral Index	-1.1%	-0.5%	-1.8%	-2.5%
HFRI Macro (Total) Index33	-1.4%	-1.6%	-0.5%	1.9%
HFRX Macro/CTA Index	-1.6%	-2.7%	-2.5%	-3.3%
HFRI Relative Value (Total) Index33	1.4%	4.5%	6.0%	7.6%
HFRX Relative Value Arbitrage Index	0.3%	1.7%	1.3%	3.0%

Source: Man database, Bloomberg, MSCI and Source. 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.

1) Represented by Man AHL Diversified (Guernsey) USD shares - Class A, which is valued weekly; however, for comparative purposes, statistics have been calculated using the last weekly valuation for each month.

2) Represented by AHL Strategies PCC Limited: Class Y AHL Alpha USD Shares, which is valued weekly; however, for comparative purposes, statistics have been calculated using the last weekly valuation for each month.

3) Represented by AHL (Cayman) SPC - Class A1 Evolution USD Shares.

4) Represented by AHL Strategies PCC Limited: Class B AHL Dimension USD Shares.       

5) Represented by TailProtect Limited Class B.                                     

6) Represented by the official performance of Man GLG Europe Plus Source ETF net of a 0.75% p.a. management fee and no performance fee. Provided by Source.                                                                                             

7) Represented by GLG European Long Short Fund - Class D Unrestricted - EUR.

8) Represented by GLG European Equity Alternative IN EUR.

9) Represented by GLG European Alpha Alternative IN EUR.

10) Represented by GLG North American Opportunity Fund - Class A Unrestricted - USD.

11) Represented by GLG North American Equity Alternative IN USD.

12) Represented by GLG Alpha Select Fund - Class C - EUR.

13) Represented by GLG Alpha Select Alternative IN H EUR.

14) Represented by GLG Global Opportunity Fund - Class Z - USD.

15) Represented by GLG Global Convertible Fund - Class A - USD.

16) Represented by GLG Global Convertible UCITS Fund - Class IL T USD to Class IM USD (08/06/2009).

17) Represented by GLG Market Neutral Fund - Class Z Unrestricted - USD.     

18) Represented by GLG European Distressed Fund - Class A - USD.               

19) Represented by Ore Hill International Fund II Ltd.

20) Represented by GLG Emerging Markets Fund - Class A Unrestricted - USD.

21) Represented by GLG EM Diversified Alternative IN H USD.

22) Represented by GLG Atlas Macro Fund - Class A - USD.                                              

23) Represented by GLG Atlas Macro Alternative IN USD.                                                    

24) Represented by GLG Japan CoreAlpha Equity Fund - Class C to Class I JPY (28/01/2010).         

25) Represented by GLG Global Equity Fund - Class I T USD to Class I USD (13/05/2011).

26) Represented by Absolute Alpha Fund PCC Ltd Diversified - USD.

27) Represented by FRM Diversified II Fund SPC - Class A USD.

28) Represented by FRM Dynamic Selection USD I.

29) Represented by Man GLG Multi-Strategy Fund - Class A - USD Shares, adjusted to reflect a standard institutional fee rebate of 1% until 31 December 2012. From 1 January 2013, the actual performance of Man GLG Multi-Strategy Fund - Class G - USD Shares is displayed which is gross.

30) Represented by MSCI World Net Total Return Index hedged to USD.             

31) Represented by Citigroup World Government Bond Index hedged to USD (total return).                                

32) Represented by Citigroup High Grade Corp Bond TR.                                                      

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

34) The historic Barclay BTOP 50 Index data is subject to change.

Please note that the dates in brackets represent the date of the join in the linked track records.

*Estimated.

Enquiries

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Head of Investor Relations

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David Waller

Head of Communications

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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. As at 30 September 2013, Man managed $52.5 billion.

The original business was founded in 1783. Today, Man is listed on the London Stock Exchange and is a member of the FTSE 250 Index with a market capitalisation of around £1.5 billion.

Man is a signatory to the United Nations Principles for Responsible Investment (PRI). Man also supports many awards, charities and initiatives around the world, including sponsoring the Man Booker literary prizes. Further information can be found at www.man.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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