Trading Statement

RNS Number : 8194D

Man Group plc

12 October 2018

 

Press Release

12 October 2018

TRADING STATEMENT for the quarter ended 30 September 2018

Key points

·     Funds under management (FUM) of $114.1 billion at 30 September 2018 (30 June 2018: $113.7 billion)

o  Net inflows in the quarter of $0.4 billion, notwithstanding the previously announced $2.2 billion infrastructure mandate redemption

o  Positive investment movement of $0.9 billion in the quarter

o  Negative FX movements of $0.7 billion in the quarter

o  Other movements of negative $0.2 billion in the quarter

·     Markel Corporation ("Markel") have entered into a definitive agreement to acquire Nephila Holdings Limited ("Nephila"). The sale of Man Group's 18.5% management fee only profit interest in Nephila would generate net proceeds of around $130 million

·     Proposed realignment of international corporate structure to reflect growth in the business

Luke Ellis, Chief Executive Officer of Man Group, said:

"Funds under management were slightly up in the quarter with net inflows of $0.4 billion, despite the previously announced $2.2 billion infrastructure mandate redemption. Positive investment movements offset negative FX and other movements. We saw continuing inflows into our alternative risk premia strategies and strong flows into our systematic equity strategies. Investment performance in the quarter was mixed with strong absolute and relative performance in our momentum and discretionary long only strategies but weaker relative performance in our discretionary alternative and systematic equity strategies.  

Looking forward, Man Group is well positioned, with strong fundamentals, and we remain focused on enhancing our technology platform and continuing to develop innovative strategies for our clients."

Corporate developments

In April 2018, the Board announced a share repurchase programme for up to $100 million to return surplus capital to shareholders. Currently, around $96 million worth of shares have been repurchased. 

Markel has entered into a definitive agreement to acquire Nephila. The acquisition, which remains subject to regulatory approvals, is currently expected to complete in the fourth quarter of 2018 and would generate net proceeds of around $130 million for Man Group's 18.5% management fee only profit interest in Nephila. On completion the net proceeds would add an equivalent amount to Man's regulatory capital surplus. Man's interest in Nephila dates from 2008 and in 2017 the share of associate income from Nephila was $7 million (2016: $3 million).

As has been consistently stated Man Group expects to generate significant surplus capital over time, primarily from net performance fee earnings, but occasional one-off developments can also contribute to surplus. Available capital surpluses may be distributed to shareholders over time by way of higher dividend payments and/or share repurchases, whilst maintaining a prudent balance sheet and taking into account required capital (including liabilities for future earn-out payments) and potential strategic opportunities.

Proposed realignment of international corporate structure

Man Group has seen significant growth in the size of its US business over the past five years alongside growth in other international markets and the UK. As a result we are proposing to adjust our international governance and corporate structure. The proposed structure should provide greater flexibility for the Group going forward, support the effective and efficient governance of the business as we continue to deliver for our clients and invest for our shareholders, and is consistent with market practice for many global institutional asset management businesses.

In order to implement this change Man Group plc is proposing to incorporate a new Group holding company in Jersey ("New Holdco"). Following this change:

·     The Group's shares would remain UK listed and we do not expect changes to our inclusion in indices

·     The Group would remain UK tax resident, with no expected change to our effective tax rate

·     There would be no impact on our presence or the business operations in London

·     There would be no impact on the location of employees as a result of this proposal, with the exception of the Group's Chief Administrative Officer relocating to the US as part of the proposed structure, which will enhance the existing management structure in our international operations

The proposed holding company structure, which is subject to shareholder approvals, would be implemented by means of a Court approved scheme of arrangement (the "Scheme") under the Companies Act 2006. Pursuant to the Scheme, shareholders would exchange their existing ordinary shares in Man Group plc for shares in New Holdco on a one-for-one basis and Man Group plc would remain the head of the FCA-supervised regulatory group (a sub-group of New Holdco). Other current subsidiaries of Man Group plc that operate in the US and Asia would be reorganised under New Holdco and will continue to be regulated by their local regulators. Necessary approvals will be sought from regulators, including the FCA. Should any regulatory capital efficiencies be achieved as a result of the reorganisation, the benefits would be considered in the same way as other capital surpluses. Further details of the proposal will be provided in due course. 

THIRD QUARTER FUM COMMENTARY

FUM movements for the three months to 30 September 2018

$bn	FUM at 30 June 2018	Net inflows/ (outflows)	Investment movement	FX & other	FUM at 30 September 2018
Alternative	65.7	(0.4)	-	(0.7)	64.6
Absolute return	29.7	0.2	0.2	(0.2)	29.9
Total return	20.1	1.2	(0.2)	(0.4)	20.7
Multi-manager solutions	15.9	(1.8)	-	(0.1)	14.0
Long only	47.9	0.8	0.9	(0.2)	49.4
Systematic	26.3	1.2	0.3	0.1	27.9
Discretionary	21.6	(0.4)	0.6	(0.3)	21.5
Guaranteed	0.1	-	-	-	0.1
Total	113.7	0.4	0.9	(0.9)	114.1

FUM movements for the nine months to 30 September 2018

$bn	FUM at 31 December 2017	Net inflows/ (outflows)	Investment movement	FX & other	FUM at 30 September 2018
Alternative	61.7	5.9	(0.8)	(2.2)	64.6
Absolute return	29.2	2.3	(0.5)	(1.1)	29.9
Total return	16.5	5.8	(0.3)	(1.3)	20.7
Multi-manager solutions	16.0	(2.2)	-	0.2	14.0
Long only	47.2	2.8	-	(0.6)	49.4
Systematic	26.8	1.2	(0.1)	-	27.9
Discretionary	20.4	1.6	0.1	(0.6)	21.5
Guaranteed	0.2	-	-	(0.1)	0.1
Total	109.1	8.7	(0.8)	(2.9)	114.1

ALTERNATIVE

Absolute return

Absolute return FUM increased by $0.2 billion in the quarter. Net inflows included $0.3 billion into AHL institutional solutions partially offset by small outflows from the Numeric market neutral strategy. Positive investment movement of $0.2 billion was due to positive performance across Man AHL's momentum strategies partially offset by negative performance across Man GLG's alternative strategies. As at 30 September 2018, 55% of Man AHL performance fee eligible FUM was at high watermark and 16% was within 5% of high watermark. As at 30 September 2018, 36% of Man GLG performance fee eligible FUM was at high watermark and 51% was within 5% of high watermark. As we noted at the interim results, and given investment performance in the third quarter, we would currently expect the Group's compensation ratio for 2018 to be at the higher end of our 40-50% range.

Total return

Total return FUM increased by $0.6 billion during the quarter. Net inflows included $0.6 billion into diversified risk premia strategies and $0.2 billion into emerging market debt total return strategies. The negative investment movement of $0.2 billion during the quarter mainly related to negative absolute performance in emerging market debt total return strategies but the strategy had strong relative performance in the nine months to 30 September 2018. Negative FX and other movements were due to a CLO maturity as well as the dollar strengthening against Sterling.

Multi-manager solutions

Multi-manager solutions FUM decreased to $14.0 billion during the quarter due to net outflows of $1.8 billion which included the previously announced $2.2 billion redemption from an infrastructure mandate partially offset by a $0.6 billion segregated mandate win.

LONG ONLY

Systematic

Systematic long only FUM increased by 6% in the quarter. The net inflow of $1.2 billion included inflows into international and global strategies. Investment movement increased FUM by $0.3 billion during the period however on a relative basis Numeric's strategies have underperformed in 2018 due to their value bias.

Discretionary

Discretionary long only FUM decreased by $0.1 billion in the period. The investment movement of $0.6 billion was driven by positive performance in the Japan CoreAlpha strategy. The net outflows of $0.4 billion were also driven by the Japan CoreAlpha strategy. Negative FX movements reduced FUM by $0.3 billion, primarily due to the strengthening of the dollar against Sterling and the Yen.

FUM by product category

$bn	30-Sep-17	31-Dec-17	31-Mar-18	30-Jun-18	30-Sep-18
Absolute return	27.2	29.2	29.3	29.7	29.9
GLG Equity absolute return	3.4	3.8	5.5	6.2	6.3
AHL Dimension	5.7	5.9	5.3	5.3	5.5
AHL Alpha1	4.8	5.2	5.0	4.9	4.8
AHL Evolution	3.4	3.7	3.4	3.4	3.5
Man Institutional Solutions2	2.8	3.2	3.3	3.1	3.4
Numeric absolute return	1.8	1.9	1.9	1.9	1.8
AHL other	1.8	1.8	1.6	1.8	1.8
AHL Diversified1	2.1	2.1	2.0	1.8	1.7
GLG Credit absolute return	1.4	1.6	1.3	1.3	1.1
Total return	14.4	16.5	18.5	20.1	20.7
Diversified risk premia	4.1	5.7	7.5	9.0	9.7
EM total return	3.9	4.4	4.5	4.4	4.6
CLO	4.2	4.2	4.4	4.4	4.1
GPM	2.2	2.2	2.1	2.3	2.3
Multi-manager solutions	15.5	16.0	16.2	15.9	14.0
Segregated	5.8	6.0	6.3	6.6	7.3
Infrastructure & direct access	7.1	7.7	7.7	7.2	4.8
Diversified and thematic FoHF	2.6	2.3	2.2	2.1	1.9
Systematic long only	26.8	26.8	26.9	26.3	27.9
Global	9.5	9.6	8.7	8.4	9.0
International	6.4	6.4	6.7	6.9	7.6
Emerging markets	6.5	6.7	7.6	7.0	7.0
US	4.4	4.1	3.9	4.0	4.3
Discretionary long only	19.4	20.4	21.6	21.6	21.5
Japan equity	8.5	9.7	9.5	9.0	9.1
Europe equity	3.1	3.5	4.2	4.8	4.9
Other equity	2.2	2.2	2.2	2.6	2.6
Credit & convertibles	3.3	2.9	2.7	2.3	2.1
EM Fixed income	1.2	1.1	1.9	1.8	1.9
Multi Asset	1.1	1.0	1.1	1.1	0.9
Guaranteed	0.2	0.2	0.2	0.1	0.1
Total	103.5	109.1	112.7	113.7	114.1

1 AHL Alpha UCITS and AHL Momentum UCITS have been reclassified from AHL Diversified to AHL Alpha

2 Man Institutional Solutions includes AHL Institutional Solutions and Multi-strategy. AHL Institutional Solutions invests into a range of AHL strategies including AHL Dimension, AHL Alpha and AHL Evolution and now includes GLG Multi-strategy

 

FUM by investment engine

$bn	30-Sep-17	31-Dec-17	31-Mar-18	30-Jun-18	30-Sep-18
AHL	22.0	24.0	23.8	24.5	25.1
Dimension	5.7	5.9	5.3	5.3	5.5
Alpha1	4.8	5.2	5.0	4.9	4.8
Diversified risk premia	1.8	2.5	3.6	4.6	4.7
Evolution	3.4	3.7	3.4	3.4	3.5
Institutional Solutions2	2.2	2.6	2.7	2.6	3.0
Diversified (inc. Guaranteed)1	2.3	2.3	2.2	1.9	1.8
Other	1.8	1.8	1.6	1.8	1.8
Numeric	30.9	31.9	32.7	32.6	34.7
Alternatives	4.1	5.1	5.8	6.3	6.8
Diversified risk premia	2.3	3.2	3.9	4.4	5.0
Numeric absolute return	1.8	1.9	1.9	1.9	1.8
Long only	26.8	26.8	26.9	26.3	27.9
Global	9.5	9.6	8.7	8.4	9.0
International	6.4	6.4	6.7	6.9	7.6
Emerging markets	6.5	6.7	7.6	7.0	7.0
US	4.4	4.1	3.9	4.0	4.3
GLG	32.9	35.0	37.9	38.4	38.0
Alternatives	13.5	14.6	16.3	16.8	16.5
Equity absolute return3	3.8	4.2	5.9	6.5	6.6
EM total return	3.9	4.4	4.5	4.4	4.6
CLOs	4.2	4.2	4.4	4.4	4.1
Credit absolute return3	1.6	1.8	1.5	1.5	1.2
Long only	19.4	20.4	21.6	21.6	21.5
Japan equity	8.5	9.7	9.5	9.0	9.1
Europe equity	3.1	3.5	4.2	4.8	4.9
Other equity	2.2	2.2	2.2	2.6	2.6
Credit & convertibles	3.3	2.9	2.7	2.3	2.1
EM Fixed income	1.2	1.1	1.9	1.8	1.9
Multi Asset	1.1	1.0	1.1	1.1	0.9
FRM	15.5	16.0	16.2	15.9	14.0
Segregated	5.8	6.0	6.3	6.6	7.3
Infrastructure & direct access	7.1	7.7	7.7	7.2	4.8
Diversified and thematic FoHF	2.6	2.3	2.2	2.1	1.9
GPM	2.2	2.2	2.1	2.3	2.3
Total	103.5	109.1	112.7	113.7	114.1

1 AHL Alpha UCITS and AHL Momentum UCITS have been reclassified from AHL Diversified to AHL Alpha

2 Institutional Solutions invests into a range of AHL strategies including AHL Dimension, AHL Alpha and AHL Evolution

3 GLG Equity absolute return and GLG Credit absolute return include allocations from Multi-strategy included in Man Institutional solutions in the FUM by product category table 

Investment Performance

		Total Return		Annualised Return
		Last 3 months	Last 9 months	3 years	5 years	Since Inception
Absolute return
AHL Dimension	1	3.2%	1.1%	1.1%	5.6%	5.1%
AHL Alpha	2	-0.1%	-2.3%	-0.9%	5.2%	10.9%
AHL Evolution	3	3.4%	0.1%	6.1%	11.7%	13.4%
AHL Diversified	4	-1.2%	-6.7%	-5.0%	4.7%	11.0%
Man Numeric Market Neutral Alternative	5	-2.9%	-4.3%	-1.3%	1.9%	3.5%
GLG European Long Short Fund	6	-3.5%*	-1.3%*	2.3%*	1.0%*	7.2%*
Man GLG Global Credit Multi Strategy	7	0.9%*	4.7%*	10.5%*	5.3%*	12.6%*
Total return
Man Alternative Risk Premia SP	8	1.5%	0.3%	5.7%	n/a	6.5%
Man GLG Global EM Debt Total Return	9	-1.7%	0.4%	n/a	n/a	3.5%
Multi-manager solutions
FRM Diversified II	10	1.3%*	1.2%*	0.9%*	2.1%*	4.2%*
Systematic long only
Numeric Global Core	11	3.3%	1.1%	12.9%	11.0%	12.3%
Relative Return		-1.7%	-4.4%	-0.7%	1.8%	2.2%
Numeric Europe Core (EUR)	12	0.1%	2.0%	9.0%	10.6%	9.3%
Relative Return		-1.2%	1.1%	2.8%	3.6%	2.9%
Numeric Emerging Markets Core	13	-2.7%	-8.7%	15.3%	6.8%	6.4%
Relative Return		-1.6%	-1.1%	2.9%	3.2%	3.2%
Discretionary long only
Man GLG Japan Core Alpha Equity Fund	14	7.9%	-0.7%	9.7%	10.7%	4.9%
Relative Return		2.0%	-2.6%	-1.4%	-0.4%	2.4%
Man GLG Continental European Growth Fund	15	-0.6%	7.5%	18.2%	17.8%	9.7%
Relative Return		-3.7%	5.8%	3.4%	8.1%	4.0%
Man GLG Undervalued Assets Fund	16	-1.9%	0.5%	12.9%	n/a	10.8%
Relative Return		-1.1%	-0.3%	1.4%	n/a	4.0%
Indices
HFRX Global Hedge Fund Index	17	-0.4%	-1.2%	2.2%	1.0%
HFRI Fund of Funds Conservative Index	17	1.0%	2.6%	2.9%	3.0%
Barclay BTOP 50 Index	18	1.2%	-2.6%	-2.6%	1.2%
HFRI Equity Hedge (Total) Index	17	0.7%	1.9%	7.4%	5.1%
HFRX EH: Equity Market Neutral Index	17	-0.7%	-0.5%	-1.0%	1.4%

 

Investment Performance (Cont'd)

	1.       Represented by AHL Strategies PCC Limited: Class B AHL Dimension USD Shares from 3 July 2006 to 31 May 2014, and by AHL Dimension (Cayman) Ltd - F USD Shares Class from 1 June 2014 until 28 February 2015 when AHL Dimension (Cayman) Ltd - A USD Shares Class is used. Representative fees of 1.5% Management Fee and 20% Performance Fee have been applied. 2.       Represented by AHL Alpha plc from 17 October 1995 to 30 September 2012, and by AHL Strategies PCC Limited: Class Y AHL Alpha USD Shares from 1 October 2012 to 30 September 2013. The representative product was changed at the end of September 2012 due to the provisioning of fund liquidation costs in October 2012 for AHL Alpha plc, which resulted in tracking error compared with other Alpha Programme funds. Both funds are valued weekly; however, for comparative purposes, statistics have been calculated using the best quality price that is available at each calendar month end, using estimates where a final price is unavailable. Where a price, either estimate or final is unavailable on a calendar month end, the price on the closest date prior to the calendar month end has been used. Both of the track records have been adjusted to reflect the fee structure of AHL Alpha (Cayman) Limited - USD Shares. From 30 September 2013, the actual performance of AHL Alpha (Cayman) Limited - USD Shares is displayed. 3.       Represented by AHL Evolution Limited adjusted for the fee structure (2% p.a. management fee and 20% performance fee) from September 2005 to 31 October 2006; and by AHL Strategies PCC: Class G AHL Evolution USD from 1 November 2006 to 30 November 2011; and by the performance track record of AHL Investment Strategies SPC: Class E AHL Evolution USD Notes from 1 December 2011 to 30 November 2012. From 1 December 2012, the track record of AHL (Cayman) SPC: Class A1 Evolution USD Shares has been shown. All returns shown are net of fees. 4.       Represented by Man AHL Diversified plc from 26 March 1996 to 29 October 2012, and by Man AHL Diversified (Guernsey) USD Shares - Class A from 30 October 2012 to date. The representative product was changed at the end of October 2012 due to legal and/or regulatory restrictions on Man AHL Diversified plc preventing the product from accessing the Programme's revised target allocations. Both funds are valued weekly; however, for comparative purposes, statistics have been calculated using the best quality price that is available at each calendar month end, using estimates where a final price is unavailable. Where a price, either estimate or final is unavailable on a calendar month end, the price on the closest date prior to the calendar month end has been used.
	5.       Numeric alternative market neutral composite 6.       Represented by GLG European Long Short Fund - Class D Restricted - EUR until 29 June 2007. From 1 July 2007 to 31 July 2018 the performance of GLG European Long Short Fund - Class D Unrestricted is displayed. After this date, the performance of Class GLG European Long Short Fund - Class I Unrestricted is displayed 7.       Represented by GLG Market Neutral Fund - Class Z Restricted - USD until 31 August 2007. From the 1 September 2007 Man GLG Global Credit Multi Strategy CL IL XX USD unrestricted.
	8.       Represented by Man Alternative Risk Premia Class A USD. 9.       Represented by Man GLG Global Emerging Markets Debt Total Return Class I USD. 10.     Represented by FRM Diversified II Fund SPC - Class A USD ('the fund') until April 2018 then Class A JPY hedged to USD there after. However, prior to Jan 2004, FRM has created the FRM Diversified II pro forma using the following methodology: i) for the period Jan 1998 to Dec 2003, by using the returns of Absolute Alpha Fund PCC Limited - Diversified Series Share Cell ('AA Diversified - USD') adjusted for fees and/or currency, where applicable. For the period Jan 2004 to Feb 2004, the returns of the fund's master portfolio have been used, adjusted for fees and/or currency, where applicable. Post Feb 2004, the fund's actual performance has been used, which may differ from the calculated performance of the track record. There have been occasions where the 12-months' performance to date of FRM Diversified II has differed materially from that of AA Diversified. Strategy and holdings data relates to the composition of the master portfolio. 11.     Performance relative to the MSCI World. This reference index is intended to best represent the strategy's universe. Investors may choose to compare returns for their accounts to different reference indices, resulting in differences in relative return information. Comparison to an index is for informational purposes only, as the holdings of an account managed by Numeric will differ from the securities which comprise the index and may have greater volatility than the holdings of an index. 12.     Performance relative to the MSCI Europe (EUR). This reference index is intended to best represent the strategy's universe. Investors may choose to compare returns for their accounts to different reference indices, resulting in differences in relative return information. Comparison to an index is for informational purposes only, as the holdings of an account managed by Numeric will differ from the securities which comprise the index and may have greater volatility than the holdings of an index. 13.     Performance relative to MSCI Emerging Markets. This reference index is intended to best represent the strategy's universe. Investors may choose to compare returns for their accounts to different reference indices, resulting in differences in relative return information. Comparison to an index is for informational purposes only, as the holdings of an account managed by Numeric will differ from the securities which comprise the index and may have greater volatility than the holdings of an index. 14.     Represented by Man GLG Japan CoreAlpha Fund - Class C converted to JPY until 28 January 2010. From 1 February 2010 Man GLG Japan CoreAlpha Equity Fund - Class I JPY is displayed. Relative return shown vs TOPIX (JPY, GDTR). 15.     Represented by Man GLG Continental European Growth Fund Class C Accumulation Shares. Relative return shown vs FTSE World Europe Ex UK (GBP, GDTR).
	16.     Represented by Man GLG Undervalued Assets Fund - C Accumulation Shares. Relative return shown vs FTSE All Share (GBP, NDTR). 17.     HFRI and HFRX index performance over the past 4 months is subject to change. 18.     The historic Barclay BTOP 50 Index data is subject to change.
Past or projected performance is no indication of future results. Financial indices are used for illustrative purposes only and are provided for the purpose of making a comparison to general market data as a point of reference and should not be construed as a true comparison to the strategy. The information herein is being provided solely in connection with this press release and is not intended to be, nor should it be construed or used as, investment, tax or legal advice, any recommendation or opinion regarding the appropriateness or suitability of any investment or strategy, or an offer to sell, or a solicitation of an offer to buy, an interest in any security, including an interest in any fund or pool described herein. *Estimated

 

Enquiries

Fiona Smart

Head of Investor Relations

[phone]

[e-mail] 

Rosanna Konarzewski

Global Head of Communications & Marketing

[phone]

[e-mail] 

Michael Turner

Finsbury

[phone]

[e-mail]

About Man Group

Man Group is a global active investment management firm, which runs $114.1 billion* of client capital in liquid and private markets, managed by investment specialists based around the world. Headquartered in London, the firm has 15 international offices and operates across 25 jurisdictions. Our business has five specialist investment engines, which represent the range of our capabilities: Man AHL, Man Numeric, Man GLG, Man FRM and Man GPM.

These engines house numerous investment teams, working collaboratively within the framework of Man Group, with a high degree of investment autonomy. Each team benefits from the strength and resources of the firm's single operating platform, enabling their primary focus to be seeking to generate alpha for clients. The teams invest across a diverse range of strategies and asset classes with highly specialised approaches, with long only and alternative strategies run on a discretionary and quantitative basis in single and multi-manager formats. Our clients are at the heart of everything we do and we engage in close dialogue with our investors as strategic partners, to understand their particular needs and constraints. Man Group's investment teams are empowered and supported by our institutional infrastructure and technology, which aims to facilitate the most efficient exposure to markets and effective collaboration across the organisation.

Through the Man Charitable Trust and sponsorship of the Man Booker Prizes, Man Group is committed to promoting literacy and numeracy on a global scale, and to supporting charitable causes more broadly.

Man Group plc is listed on the London Stock Exchange under the ticker EMG.LN and is a constituent of the FTSE 250 Index. Further information can be found at www.man.com.

*As at 30 September 2018. All investment management and advisory services are offered through the investment "engines" of Man AHL, Man Numeric, Man GLG, Man FRM and Man Global Private Markets (GPM).

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 or to invest in any investment products mentioned herein.

This announcement contains inside information.

 

END

 

 

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