Reuters: London In the year to December 31, Man Group, a hedge fund company, reported a 4% decline in assets under management to $143.3 billion, exceeding analyst expectations. This was due to stock and bond market declines, a slew of central bank rate hikes, and other factors that presented challenges but also opportunities for hedge funds.
The business reported a $779 million core pretax profit for the entire year, an 18% increase from the prior year.
It gathered $779 million in core performance fees, recording a 6% increase in core net management fees.
“Higher volatility and dispersion resulted in more alpha production. The environment that presented challenges to us also provided chances for shareholders to earn higher returns and profits,” Antoine Forterre, the chief financial officer, told Reuters.
According to a note from Jefferies on February 21, Man Group’s UK investors used the hedge fund, particularly its AHL and Alternative Risk Premia funds, as an alternative to conventional bond and stock portfolios, which performed poorly in 2022.
The company reported net inflows of $3.1 billion for 2022, a decrease of 77% from the previous year but a 5.3% increase over the average figure reported by the UK hedge fund sector.
Investing in liability-driven investment (LDI) funds led to billions of pounds’ worth of collateral demands in September, forcing many UK pension funds to scramble for cash.
Many pension funds looked to lucrative assets they had already made elsewhere, such as investments in hedge funds and CLOs.
Forterre said that one of the headwinds that affected clients was LDI. As a result, there were more redemptions at the close of the third quarter and the beginning of the fourth quarter.
He added that at the time, some of the schemes from which investors withdrew funds were generating double-digit returns.
“We were there because a particular group of clients required us at the time. Many have only partially atoned, and we pray they return “said he.
Separately, Man announced that its head John Cryan would leave the board of directors by the end of 2023. He has been succeeded by Anne Wade, who has been a non-executive member since April 2020.