Man Group eyes client wins as outflows slow

LONDON Thu Mar 1, 2012 6:43am EST

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LONDON (Reuters) - Man Group, the world's biggest listed hedge fund firm, cheered investors with news of lower fund outflows in a more buoyant 2012 for financial markets and said clients could begin to return after recent heavy withdrawals.

The firm (EMG.L), whose shares have halved over the past year on concerns over outflows and the performance of its funds, said assets under management rose to an estimated $59.5 billion (37.3 billion pounds) from $58.4 billion at end-December, as rising markets helped boost its fund performance.

At 10:23 a.m. Man's shares were up 7.8 percent at 141.12 pence.

CEO Peter Clarke said there had been a "significant" fall in net client outflows this year, particularly in February.

"If sentiment is maintained and performance continues... we'd expect it to translate into rising sales and net inflows," Clarke said on a call to journalists.

Clarke's prediction comes after a difficult few years for Man, which has suffered net client outflows in every quarter over the past three years, apart from the first two quarters of last year.

In September, it reported its fastest rate of outflows since early 2009 while in January it reported a slightly reduced pace of withdrawals and announced further job cuts.

Analysts at Goldman Sachs said in a note on Thursday that they estimated net outflows so far this year at $1.1 billion.

"The pace of asset raising is likely to remain slow, at least in the first half of 2012, but this is already reflected in estimates and deeply discounted in the rating in our view," said Singer Capital Markets analyst Sarah Ing.

DIVIDEND

Man also held its dividend, which has been the subject of speculation given it is not currently covered by earnings, for 2011 and 2012 and said it would supplement future dividends with surplus capital.

The final dividend for the nine months to end-December is held at 7 cents a share, while the same annualised dividend of 22 cents will be paid this year.

In future, Man said it will pay out all of its adjusted management fee earnings each year in dividends. In addition, performance fee earnings will be added to its capital surplus and paid out over time via dividends and/or share buybacks.

"Through the financial crisis we've built capital reserves," said Clarke. "(In future) we'll be distributing performance fees, not accumulating capital."

Man has been buoyed by an upturn in performance from its flagship computer-driven fund AHL, which is up 2.5 percent so far this year after losing 6.4 percent in 2011.

The $21 billion fund, which is named after 1980s founders Michael Adam, David Harding and Martin Lueck and which tries to make money following market trends, is now on average 10.9 percent below its so-called high-water mark, above which it earns lucrative performance fees.

The firm also saw a strong performance so far this year from funds run by its GLG unit, which it bought for $1.6 billion in 2010 in a deal that has been criticised by some commentators.

So far this year the onshore versions of its Alpha Select fund is up 5.2 percent while Japan Core Alpha has gained 19.3 percent.

Man, which is shifting the timing of its financial year, posted a pretax profit of $262 million for the nine months to end-December, slightly above the $257 million it indicated in January.

(Reporting by Laurence Fletcher; Editing by Chris Vellacott and Mike Nesbit)

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