Alternative gains offset long-only losses as Man weathers H1 storm
Strong alpha generation from Man Group’s alternative strategies helped to offset market beta losses from the group’s long-only products as the world’s largest listed hedge fund manager turned in a robust first-half performance in the face of acutely challenging market conditions.
The group’s total assets under management fell to USD142.3 billion at the end of June – down from USD148.6 billion at the end of last year, and from USD151.4 billion at the end of Q1 2022 – as a result of overall negative investment performance of USD4.9 billion in the first six months of the year, while negative FX and other movements added a further USD4.6 billion of losses.
But the firm saw net inflows during the first half of USD3.2 billion – with the USD4.8 billion of inflows into alternative absolute return, total return, and multi-manager solutions more than compensating for the USD1.6 billion of outflows from long-only systematic and discretionary strategies.
Furthermore, Man’s suite of alternative strategies generated impressive positive investment performance of USD2.1 billion during the first half – in sharp contrast to the USD7 billion of negative investment performance suffered by the group’s long-only strategies.
The good performance of the group’s higher-margin alternative offerings translated into decent financial results for H1 2022 – with the firm reporting a 28 per cent year-on-year gain in core earnings per share, a 23 per cent rise in core management fee earnings per share, and a hefty 32 per cent jump in core performance fee earnings per share.
Describing the first-half performance as “yet another strong period for Man Group”, chief executive officer Luke Ellis said: “Amidst a volatile market environment, we delivered for our clients and shareholders alike, demonstrating the value that active, uncorrelated investment strategies and solutions can bring to portfolios.”
He added: “Strong performance from our absolute return strategies, positive alpha from our long-only strategies, net inflows 2.7 per cent ahead of the industry, and a 28 per cent increase in core earnings per share reflect the quality of our people, the benefit of our technology, and the attractiveness of our differentiated business model.”
The impressive performance from the firm’s absolute return strategies has driven significant growth in absolute return AUM over the past year – increasing by almost 30 per cent to USD 49.3 billion at the end of June, up from USD38.3 billion 12 months ago – while long-only AUM has fallen by more than 10 per cent over the same period.
In terms of individual strategy performance, the group’s AHL systematic CTA offerings underlined the value of uncorrelated returns that managed futures and trend-following products can provide in times of market stress – with first-half gains of 17.2 per cent for AHL Diversified, 11.3 per cent for AHL Alpha, and 10.9 per cent for AHL Evolution.
By contrast, the firm’s suite of long-only offerings sustained some heavy losses amid the market sell-offs – including falls of 19.8 per cent for Numeric Global Core, 15 per cent apiece for Numeric Europe Core and Numeric Emerging Markets Core, and 27.3 per cent for the growth-biased GLG Continental European Growth strategy – although the group’s GLG Japan CoreAlpha Equity long-only strategy was a significant outlier on the positive side, gaining 14.5 per cent over the first six months.
“We enter the second half with high performance fee potential and a good level of client engagement,” said Ellis. “While we expect some volatility in flows in the near term, as clients access liquidity and rebalance their portfolios due to market movements, we remain focused on the long term. We are confident that our diversified range of investment strategies and continued focus on alpha generation position us well for future growth.”