Performance fees surge at Man Group

Performance fees almost tripled to $345m (£267m) in the period thanks in large part to strong runs for the absolute return funds managed by AHL, the listed hedge fund’s quantitative investment division. That in turn led adjusted earnings to handsomely beat market forecasts of 18¢ a share.

On a broader view, however, this was a less impressive advert for Man’s strategies. After our recent tip on the shares, the group got in touch to point out that an asset-weighted returns – rather than median return in Man’s universe of funds – is a better way to track annualised performance. Their preferred method nonetheless underperformed peers by 1.1 per cent in 2019.

Chief executive Luke Ellis blamed this on “a more challenging period for alpha generation”, as valuation strategies lagged. It’s worth noting that Man outperformed its peers by 1 per cent in 2018, so it is altogether more concerning that net outflows hit $1.3bn last year, as previously disclosed.

In turn, this has been partly blamed on clients’ ongoing pivot to bonds, an area in which Man has had limited historical presence. “Going forward, we would hope to grow our fixed income and credit capabilities,” suggests Mr Ellis.

Analysts at Numis expect the dividend to decline to 9.1¢ per share in 2020, swinging back to 9.8¢ in 2021.