Man Group shares surge on bumper performance fees

Reuters

Published Feb 28, 2023 02:23AM ET

Updated Feb 28, 2023 04:56AM ET

By Nell Mackenzie

LONDON (Reuters) -Hedge fund Man Group raked in its highest performance fees last year since before the financial crisis as falling stocks and bond markets and a slew of central bank rate hikes boosted trading opportunities for its funds.

Shares in the British company jumped as much as 10% in early Tuesday trading as investors cheered the 6% growth in fees to $779 million, which came in a quarter higher than analyst forecasts, and an 18% increase in full-year core pretax profit.

Assets under management dipped 4% to $143.3 billion in the year to end-December, also beating analyst expectations, after a rise in net inflows in the fourth quarter.

Finance chief Antoine Forterre told Reuters volatile markets helped his firm, which can make money when asset values fall as well as rise, meaning bigger returns for its top strategies.

Man recorded net inflows of $3.1 billion for 2022, down 77% from a year earlier, but 5.3% higher than the average in the wider fund industry.

The company also said it would kick off a new $125 million share buyback programme when it has finished the current one, which is 91% complete.

A September rout in British gilt markets drove many UK pension funds to scour for cash, after investments into liability-driven investment (LDI) funds resulted in billions of pounds worth of collateral calls.

Many pension funds reached for profitable investments they had elsewhere, like hedge funds as well as investments into collateralised loan obligations.

"LDI was one of the headwind factors which impacted clients and we saw increased redemptions in the end of the third quarter going into the fourth," said Forterre.

Some of the strategies from which investors withdrew money were posting double digit returns at the time, he added.