(Adds context on share price fall, comment by analyst)
* H1 FuM rise 7 pct to $57.7 bln after net inflows of $2.8
* Q2 net inflows down 60 pct vs Q1 at $800 mln
* CEO says remains cautious on second half
* To pay interim div of 4 cents/share vs year ago 2.6 cents
By Nishant Kumar and Simon Jessop
LONDON, Aug 1 Hedge fund manager Man Group Plc
reported a sharp fall in net inflows in the second
quarter on Friday and its chief executive said he was cautious
on the outlook for the rest of the year, attracting a mixed
reaction from analysts.
The results came the day after a debt default by Argentina
that has weighed heavily on shares of asset managers across the
region. At 1454 GMT, Man Group and peers such as Ashmore Group
, Jupiter Fund Management and Schroders
were all trading down more than 2 percent.
Man, whose shares have collapsed to a fraction of their 2008
peak, has been restructuring to reduce dependence on the
computer-driven AHL fund that took a heavy battering from the
fallout from the financial crisis which began six years ago.
However the company, which is buying asset managers Numeric
and Pine Grove to increase its presence in the United States,
remains at the mercy of unpredictable market volatility from
factors such as the Ukraine crisis.
Man said funds under management rose 7 percent to $57.7
billion in the first half, helped by net inflows of $2.8
billion. But net inflows in the June quarter plunged to $800
million, a 60 percent drop from the previous three months.
"Whilst it has been a positive first half for the firm and
we recorded another quarter of net inflows in Q2, we remain
cautious as we look to the second half of the year," said Chief
Executive Manny Roman in a statement.
Its investment performance added $700 million in the first
half, led by a 8.7 percent gain for its AHL Diversified
Programme, as stronger equity and bond markets and a lower
correlation between asset classes benefited the strategy.
"Given the pending acquisitions and improved AHL
performance, we believe that Man's cautious outlook should have
little impact on investors," said Peter Lenardos, an analyst at
RBC Capital Markets.
While the company is on course to reduce its dependence on
AHL and strengthen its business in the United States, the
world's biggest market for hedge funds, a dip in margins in the
second half also weighed on the stock.
The group's net margin was down at 1.21 percent in the first
half from 1.5 percent at the end of last year.
"Management was a bit downbeat on the flows in the second
half and also the revenue margins going forward," said David
Mccann, an analyst at brokerage Numis Securities.
Man Group shares ended down around 1.85 percent at 116.8
pence. The shares have risen 37 percent this year.
Man also said a majority of its GLG alternatives funds,
which aim to profit in both rising and falling markets, had lost
money in the June quarter. They raised significantly less money
than in the first quarter, raising concerns that flows may slow
there in coming quarters.
The company's "long-only" products, which unlike the GLG
alternative funds do not make active bets on prices falling, saw
funds under management rise 18 percent to $18.1 billion on net
inflows of $2.4 billion in the six months to end-June. However
these are lower-margin products.
"This product mix shift and consequent reduction in overall
margin is likely to continue as we sell more open-ended
alternative product, particularly to institutions," Man said.
The GLG unit recorded a positive performance in credit
strategies, but equity strategies had a below-average
performance on trend reversals in certain parts of the equity
market, Man said in a statement.
Group adjusted profit before tax rose by a tenth to $148
million as a result of cost savings, but both management and
performance fees fell in the first half from a year ago.
The money manager said it would pay an interim dividend of 4
cents per share, up from 2.6 cents a year ago, and added that
the acquisition of Pine Grove, a U.S. fund of funds manager, is
due to complete shortly.
The acquisition of Numeric, a U.S.-based computer-driven
'quant' manager that supplements its AHL strategies with $14.7
billion of funds under management, is also on track for
completion the second half of the year.
(Editing by David Holmes amd Shadia Nasralla)