Man Group's computer-driven funds are boosting earnings prospects for the world's biggest publicly traded hedge fund even as the firm reported its first outflows for a six-month period since 2015.
About 90% of Man AHL strategies, which use complex algorithms to trade, were at the "high water mark," a level that allows funds to charge performance fee, according to a company statement Wednesday. Man Group shares rose as much as 4.6% in London trading.
"We think there is potential for Man Group to report performance fees well in excess of what is currently baked into consensus forecasts," according to Paul McGinnis, an analyst at Shore Capital, referring to the quant funds.
Investors pulled $1.1 billion in the first half of the year, more than the average forecast of $1 billion of outflows, according to a company-compiled analyst consensus. Man Group's assets under management rose to $114.4 billion from $112.3 billion at the end of March, driven by market performance, the company said in the statement.
Until this year, Man Group, best known for these tech-centric investment strategies, had escaped the investor backlash against fund managers. The firm took in almost $25 billion since the start of 2015 thanks to its diversified range of funds and acquisition of competitors such as Numeric and Silvermine.
The first-half withdrawals were mainly concentrated in its long-only money pools, whereas the firm's computer-driven funds performed well. It's main $6.1 billion AHL Dimension fund was up 5.2%, while its AHL Diversified Fund surged 8.2%, up from a gain of 2.9% and a loss of 3.5% respectively in 2018. Competitors gained an average of about 4% during the period, up from losses of 4% last year, according to data from Eurekahedge.
