Man Group Faces Redemptions After $10.7 Billion of Losses
Man Group Funds Hit By $10.7 Billion of Losses in First Quarter
(Bloomberg) -- Man Group Plc is facing a rise in withdrawals after being hit by $10.7 billion of losses last quarter amid unprecedented volatility in global markets.
The investment firm pulled in net new cash and some of its hedge fund strategies made money, but it wasn’t enough to compensate for the drop in performance. Assets under management declined to $104.2 billion from a record $117.7 billion at the end of last year, according to a statement on Friday.
“We saw net inflows in the quarter and continue to win mandates, but we have seen a recent increase in redemptions as clients adjust their allocations in response to the market moves and heightened economic uncertainty,” Chief Executive Officer Luke Ellis said in the statement.
The cautious outlook from the world’s largest publicly listed hedge fund signals mounting pressure on the $3 trillion industry. The vast majority of funds failed to protect their investors as coronavirus pandemic roiled stocks, bonds, currencies and commodities. Hedge funds lost an average 7.35% last month, according to data compiled by Bloomberg.
While investors will be looking to adjust their portfolios amid the current volatility, Ellis doesn’t see a disaster for the industry in terms of flows, he said in an interview with Francine Lacqua on Bloomberg TV. “There will be a lot of churn” during the rest of the year, he said.
Man Group shares gained as much as 4.75% on Friday and were up about 4% as of 9:27 a.m. in London.
The losses were mainly concentrated in the firm’s long-only funds. The Man GLG Undervalued Assets Fund slumped 34.5%, while the Man GLG Japan Core Alpha Equity Fund lost almost 28%, according to the statement. Its quant strategies such as the AHL Alpha and AHL Diversified funds made money.
Man Group is shutting down two money pools even after making double-digit returns in them this year because redemptions made the funds too small to run, a person familiar with the matter said last week.
Read more: Man Group Shuts Two Quant Hedge Funds After Clients Pull Out
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