Man Group assets drop £4bn as flagship fund struggles

The difficulties at Man Group continued in the final quarter of 2011 with assets under management plunging by $6.1 billion (£4 billion).

Assets at the hedge fund firm fell from $64.5 billion at the end of September to $58.4 billion at the end of the year. Funds under management are now around $10 billion lower than the level they stood at in March 2011.

The group runs five main hedge fund strategies and its flagship strategy – AHL Diversified - struggled in the volatility, losing 7.7% over the quarter. This impacted sentiment with net outflows for the quarter standing at $2.5 billion as gross sales of $3.1 billion were outweighed by redemptions of $5.6 billion.

Man said it was continuing to review its operating costs and efficiencies and that it had identified a further $75 million of cost savings.

The latest update comes after a torrid 2011 for Man which saw its shares lose almost 40% in a six-week spell towards the end of the year. The sell-off has continued into this year with shares closing at 107p last night, significantly below their 12-month high of 311p.

Man chief executive Peter Clarke (pictured) said:  ‘Trading conditions have been tough for Man in the second half of 2011. Investment performance varied significantly across styles, with market volatility and reduced market liquidity impacting trading opportunities. Although some of our funds performed strongly and sales held up well, we experienced a net outflow in the last two quarters, albeit with reduced redemptions in the final three months.’

However, Clarke said he was optimistic his firm could turn around performance this year. ‘Looking ahead, our unique breadth of investment styles positions us well to capture positive performance as markets normalise and trading opportunities re-emerge. With a strong capital base and continued focus on efficiency and performance, we are well placed to benefit when investor demand improves.’

Noam Gottesman, a founding partner of GLG Partners is standing down as co-chief executive of the firm to take up the post of non-executive chairman of GLG’s US business.  His decision comes following Man’s acquisition of the firm last year.