Man Group's shares tumble after flagship fund loss

LONDON Wed Jun 5, 2013 4:49am EDT

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LONDON (Reuters) - Man Group's shares fell more than 11 percent on Wednesday after it said its flagship hedge fund AHL had suffered one of its biggest weekly losses, wiping out its profits so far this year.

The $14.1 billion computer-driven fund, which has been running since 1987 but whose performance has lagged in recent years, fell 8.9 percent over the week to June 3.

At 9:32 a.m. Man's (EMG.L) shares were down 11.4 percent at 103.2 pence.

Coupled with a 3.1 percent loss the previous week, it means that AHL has made an overall loss since January 1, having previously enjoyed bumper gains this year on the back of rising financial markets.

The loss is a blow to Man, which relies on AHL for much of its revenue and which has recently changed the management of the fund in a bid to revive performance.

After losing money in three out of the past four years the fund would have to return almost 12 percent this year for its five-year track record - which is bolstered by strong returns during 2008's market turmoil - to stay positive.

Bond and equity markets have sold off in recent weeks as investors have fretted that quantitative easing in the United States could slow down earlier than originally thought.

"Risk appetite fluctuated over the week, as mixed U.S. macroeconomic data altered expectations of monetary support by the Federal Reserve," Man said late on Tuesday.

"The programme generated a notable loss over the week, driven by long exposure to both equities and fixed-income assets."

So-called managed futures funds, developed by teams of mathematicians and scientists, try to make money following trends in global markets, but can lose out when markets suddenly change direction or behave unpredictably.

"With bond markets, rates and currencies, you've seen some big numbers on the negative side," said one fund of hedge funds manager, referring to managed futures performance in May.

Man was not the only UK-listed asset manager to see its shares fall on Wednesday.

Aberdeen Asset Management's (ADN.L) shares were 4.4 percent lower at 443.4 at 0839 GMT, the top faller in the FTSE 100 .FTSE, after news of a share sale by its Chief Investment Officer Anne Richards late on Tuesday.

(Editing by Erica Billingham)

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