When markets are volatile, to whom do investors turn? Hedge funds have long claimed to provide the solution, which partly explains why Man Group (EMG) managed to attract $10.8bn (£8.1bn) of net inflows in 2018. Unfortunately, the world’s largest listed hedge fund had a bit of a shocker during the period, posting a negative investment movement of $7.7bn, while adverse swings in currency wiped off a further $3.7bn.
Consequently, funds under management actually softened by $0.6bn to $108.5bn. Chief executive Luke Ellis also warned that despite a number of new mandates, the investment firm had seen a rise in redemptions, as clients "respond to changes in the market and adjust their portfolios".
So while Man can point to its strategies’ outperformance against a self-selected basket of peers, this hardly amounts to a ringing endorsement. During the final quarter of 2018 – a choppy period for financial markets when client scrutiny is likely to have heightened – long-only funds’ performance were particularly underwhelming, with $4.1bn of investment value lost within systematic strategies and $2.5bn in the discretionary pool. Alternative strategies held up better, while $2.3bn of net inflows into total return mandates outweighed funds leaving absolute-return strategies.
Against this weak performance, Man’s latest $100m share buyback – $53m of which has completed since its announcement in October – could prove timely, particularly if strategies start to perform.
Consensus analyst forecasts are for earnings of 17¢ a share this year, against 14¢ in 2018.
| MAN GROUP (EMG) | ||||
| ORD PRICE: | 133p | MARKET VALUE: | £2.06bn | |
| TOUCH: | 132.9-133.2p | 12-MONTH HIGH: | 197p | LOW: 124p |
| DIVIDEND YIELD: | 6.7% | PE RATIO: | 10 | |
| NET ASSET VALUE: | 103¢ | NET CASH: | $194m | |
| Year to 31 Dec | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (p) |
| 2014 | 1.15 | 384 | 20.8 | 7.9 |
| 2015 | 1.14 | 184 | 10.1 | 10.2 |
| 2016 | 0.83 | -272 | -15.8 | 9.0 |
| 2017 | 1.07 | 272 | 15.5 | 10.8 |
| 2018 | 0.96 | 278 | 17.3 | 11.8 |
| % change | -10 | +2 | +12 | +9 |
| Ex-div: | 04 Apr | |||
| Payment: | 17 May | |||
| *Includes intangible assets of $938m, or 60.5¢ a share £1=$1.32 | ||||
