LONDON (HedgeWorld.com)–During the fiscal year that ended March 31, Man Group plc* sales were US$11.5 billion, net management fee income grew 50% and net performance fee income grew 21%.
During a presentation of the preliminary results, chairman Harvey McGrath said the year had been challenging in many ways but, despite that, it was an excellent year for the company. Among the challenges he mentioned: the equity market rally, which some people argue reduces the attractiveness of alternative investment products, and significant competition across Man businesses.
Man investment returns lagged behind U.S. and U.K. equity markets during this period. Futures program AHL returned 18.3%, and Man Global Strategies, 9.1%, while the Standard & Poor’s 500 stock index gained 35%. But over a longer time horizon, measured in terms of compound annual returns for three to five years, Man funds outperformed the S&P 500 and FTSE 100 indexes.
Sales were particularly strong in Europe, said chief executive Stanley Fink. North American sales for the period came to more than US$400 million, not as high as might be expected given the size of the American market. Mr. Fink attributed this to inequality in the tax treatment of hedge funds vs. mutual funds.
Man recently registered with the Securities and Exchange Commission a new tax-advantaged product designed for retirement accounts. “We think this may be the product that allows us to make a breakthrough,” said Mr. Fink. “We still are optimistic about medium-term prospects for North American business.”
Total Man assets were US$38.5 billion as of March, divided among Man’s various divisions, with US$15.8 billion in Swiss-based fund of funds RMF, US$10.3 billion in AHL, and US$4.9 billion in Chicago-based fund of funds Glenwood. The rest is in other vehicles.
The company developed additional investment capacity to keep up with asset growth. Man Global Strategies has 50 new managers, and AHL capacity was increased. “As we speak today, we believe we have US$15 billion of usable capacity,” said Mr. Fink. Glenwood, which went through a management change last year, is now seen as stable.
Mr. Fink presented an upbeat analysis of the future. “Virtually every large country in the world, measured by economic terms, is looking to develop or update its regulatory regime for private investors investing in hedge funds,” he said.
According to him, this has huge potential, especially if tax discrimination against hedge fund-based products is ended and these are treated similar to equity. He said Man’s exceptional capability for creating structured notes “means that we are very well placed to design new products as the rules change.”
Man shares were trading at 1642 pence (about US$29) as of this writing, down 31 pence for the day, but up from around 1550 pence at the start of the year. Analysts’ target price for the company remain higher (see ).
*Man Group plc is a minority investor in HedgeWorld.
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