Man Group’s results for 2021 suggest hedge funds, having struggled for some time, are seemingly back on form. Inflows into the firm’s wide array of products were nigh-on what the entire sector enjoyed, with the listed company receiving $13.9 billion compared to the industry’s $15.9 billion according to figures from eVestment.
Man’s assets under management rose by 20 percent on a year-on-year basis to $148.6 billion, from $123.6 billion. According to eVestment, investors pulled out an estimated $19.96 billion in December, whereas Man Group enjoyed over half their inflows in the fourth quarter alone, or $7.2 billion.
Its AUM was also aided by positive investment performance of $12.5 billion although negative FX and other impacts trimmed $1.2 billion off the total.
The firm’s pre-tax profits more than doubled in the space of a year to $658 million, its core earnings per share increased by 139 percent to $0.38.7 while it also hiked its dividend by an impressive 32 percent.
The variety of Man’s products were able to capture changes in investment sentiment seen last year. For instance, as value stocks moved into favour, the firm’s AHL Evolution fund which invests in around 800 niche markets was up by 17 percent.
Japan as a market seems to be coming on to investors’ radars again and this was reflected by Man’s GLG Japan CoreAlpha rising by 28.2 percent during the reporting period.
Its AHL TargetRisk product, which invests across a variety of asset classes including equities, government and corporate bonds was also up by double digits at 14.4 percent.
However, for those value fund managers who are hoping that with central banks putting a stop to the ultra-accommodative monetary policy seen since the global financial crisis and growth stock dominance being finally thwarted, Man Group’s chief executive Luke Ellis’s comments may cause concern.
Speaking to the Financial Times, Mr Ellis is reported to have said he was “sceptical” of whether markets had seen the end of “easy money”, despite central banks indicating that interest rate hikes would continue to be used combat record levels of inflation in recent months.
He also told the publication: “The Ukraine situation pushes that [monetary policy tightening] out. It’s likely that central banks will be less aggressive than they would have been, even though their problem is worse.”
The firm looked to have impressed the sell-side who on the whole issued buy recommendations following the results. Phil Dobbin, an analyst at broker Panmure Gordon, commented: “We have long supported the company’s diversification and focus on longer duration institutional mandates. The benefit of its strategy is clearly demonstrated in growing momentum in net flow.”
Bruce Hamilton, equity analyst at JP Morgan, saw the scope for continued success for the company. He wrote that upsides, “could come from faster than anticipated return of private client risk appetite or launch of products to Japanese retail investors”.
Mr Eillis unsurprisingly was also upbeat given the consensus beating results. In his statement he said: “We are confident in our growth trajectory, entering the year with good momentum and remain focused on investing in our talent and technology, which are the foundations of the firm and cement our sustainable competitive advantage."
Given the uncertainty of the markets for numerous macro-economic and geo-political risk factors, a firm with capabilities in both public equities as well as private markets is in a position to outperform in a variety of conditions.
