UPDATE 4-Man Group year profit surges 60 percent
(Writes through with Fink detail; updates shares)
LONDON, May 29 (Reuters) - Man Group (EMG.L), the world's biggest listed hedge fund company, posted a 60 percent rise in annual profit on Thursday, riding turbulent financial markets to show growth in funds under management which fuelled record fees.
It also said its Deputy Chairman Stanley Fink, one of Europe's best known hedge fund figures, would leave the company in July after 21 years to devote more time to his other business and charitable interests.
Fink, one of the hedge fund industry's strongest advocates, was Man chief executive between 2000 and 2007, when he oversaw its rapid expansion before handing over the reins to Peter Clarke.
Clarke told Reuters a key part of the strong results stemmed from the performance of its AHL futures business, which with no exposure to equities, proved particularly successful during the intense volatility in stock markets over the past nine months.
"Diversification and low correlation is a key to surviving these markets," Clarke said.
Man's conservative product range with low leverage had also seen it attract funds as fears intensify over the gearing of other hedge funds at a time when the credit crisis bites harder.
The hedge fund industry is able to generate high returns during market downturns by using leverage, as well as swaps and short-selling shares.
Man made profit before tax from continuing operations of $2.08 billionin the year ended March 31, driven by a 161 percent increase in net performance-fee income. It made $1.3 billion the previous year.
Funds under management rose 21 percent to $74.6 billion by the end of the period and rose further in the first two months of the current financial year to an estimated $78.5 billion at the end of May, including the launch of a $1 billion Asian fund.
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It won more institutional business in the United States and Clarke also attributed its strong sales -- which at $16 billion equalled 2007's record performance -- to its geographic reach, with mature business in Asia Pacific and the Middle East.
"We have a long-established base in those parts of the world where wealth is currently being accumulated, either through high commodity prices or through trade," Clarke said.
Investors in these regions were looking at hedge funds as a means of diversifying their portfolios away from property or private equity, Clarke said.
Clarke said he expected market uncertainty and volatility to continue this year, but "the first two months of this year have demonstrated a momentum that clearly gives us a strong start".
"So long as we have uncertainty, rather than the near panic we saw in August, then I think we're set for a good year."
Analysts applauded the results, which beat Man's revised guidance in March.
"A good set of figures, ahead of increased estimates," said Cazenove in a note. "The higher base of funds should help offset a likely fall in performance fees year on year, but broadly flat earnings for the year seems likely in our view."
Man's shares rose 3.8 percent to 611 pence at 1317 GMT, making it one of the FTSE's biggest risers. Its shares have outperformed the DJ STOXX Financial Services index .SXFP by 15 percent since the start of 2008.
Man set a final dividend of 24.8 cents per share, giving a total payout of 44 cents, more than double the previous year. It also said it would restart its share buyback programme immediately, though did not specify how much it would spend.
It would use some of that money to acquire stakes in other fund managers, along the lines of its acquisition of 50 percent of credit specialist fund manager Ore Hill. Man is looking to invest in an Asian-based management firm as well as an equity-focused manager, Clarke said.
"We have $1.5 billion in surplus cash, but I'm not suggesting we will spend all of that either in a big deal or cumulatively. Our strategy is to secure access to high-quality managers, but not necessarily to own them outright," he said. (Additional reporting by Mark Potter; Editing by Quentin Bryar and Jason Neely)
