REFILE-UPDATE 2-Man Group points to strong start to 2021

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* Shares marginally lower in early trade

* Core pretax profit drops 26% for 2020

* CFO cheery on outlook for current year

March 2 (Reuters) - Man Group said it has had a strong start to 2021, as the British hedge fund manager eyes market volatility to drive up profits, after 2020 earnings slid despite funds under management reaching a record high.

Man Group’s core pretax profit fell 26% drop in to $284 million for the 12 months ended Dec. 31 due to lower fee income.

However, the company still bumped up its total dividend by 8% to 10.6 cents per share under a new progressive dividend policy after a recovery in the second half of the year.

“The idea that markets will move around more this year than they have in some of the quieter years recently is something that we agree with,” Man Group Finance Chief Mark Jones told Reuters on Tuesday.

“And that’s the environment where active asset management firms have more opportunity to add value.”

He added that the company had seen clients having extra allocations last year and that the momentum has continued into the new year.

Credit Suisse analysts, who have a “Buy” rating on the company’s stock, said investors will welcome the dividend policy, adding the risk of volatility of dividend returns was considered a barrier to investment in Man’s shares by some income investors until now.

Shares in the UK mid-cap constituent were up 1.6% by 1103 GMT.

Man Group’s funds under management reached $123.6 billion at the end of 2020 from $117.7 billion, driven by gains in its alternative strategies, where assets rose by 8% to hit $77.2 billion.

Its long-only strategies dived during the early months of the pandemic, but recovered during the market rally at the end of 2020 to finish marginally up for the year as a whole at $46.4 billion. (Reporting by Muvija M in Bengaluru; Editing by Subhranshu Sahu and Rachel Armstrong)