Proactive Investors - Run By Investors For Investors

Hedge fund giant Man Group to take US$15mln hit in 2018 from MiFID II

"The third quarter of 2017 was a period of strong alpha generation for Man, with positive performance across the firm,” said chief executive Luke Ellis
Almost half of Man’s assets are now managed through quantitative trading

The UK’s largest listed hedge fund, Man Group PLC (LON:EMG) expects profits to take a significant hit from the introduction of MiFID II next year.

MiFID II – which, among other things, will change the way investment research is paid for – comes into force in January and Man said its decision to absorb research costs will dent pre-tax profits next year by an estimated US$10-US$15mln.

Strong Q3 results

The news came in its third quarter results statement which showed funds under management surged to US$103.5bn in the three months ended September 30 (June 30: US$95.9bn).

Man had net inflows – fresh investor cash – of US$2.8bn in the quarter, driven by emerging market debt strategies and strong inflows into its “alternative risk premia”.

The company – which manages almost half of its assets through quantitative trading – saw positive investment movement of US$3.3bn in the quarter, while it got a US$0.9bn kicker from the weaker dollar.

READ: Hedge fund Man Group looks toppy after recent run up suggests Jefferies

Man’s long-only stock-picking unit increased its net assets by 11% to US$19.7bn, with investors adding US$0.6bn to emerging debt strategies and US$0.5bn to the European equities strategy.

The hedge fund also announced a new share buyback scheme worth up to US$100mln.

Clients keen on new offerings

"The third quarter of 2017 was a period of strong alpha generation for Man, with positive performance across the firm,” said chief executive Luke Ellis.

“As expected the pace of inflows and the level of margin compression both moderated during the quarter.

READ: Positive market moves helps hedge fund giant Man Group's assets under management rise by 10%

“Inflows remained strong overall and were focussed on some of our newer strategies, in particular alternative risk premia.

“We devote significant efforts to developing innovative solutions, and we are pleased to see our clients' enthusiasm for these newer offerings.”

He added: “Looking forward we continue to see a decent level of interest from clients, with our normal caveat that flows are likely to be uneven quarter to quarter."

The strong performance and news of the buyback boosted shares in early deals on Friday, with the stock up 3.4% to 186.1p.

View full EMG profile View Profile

Man Group Timeline

May 21 2012

Related Articles

Stargroup's Todd Zani talked at Proactive's CEO Sessions
September 15 2017
Todd Zani presented a Bitcoin solution and growing revenues at Proactive's CEO Sessions.
Audi car
July 03 2017
In a trading statement delivered to the group’s annual general meeting on May 18, S&U said its fiscal first quarter saw a record number of loan applications, with new transactions up by a fifth year-on-year
July 19 2017
The regulatory restrictions of the bank mobilisation period have been lifted and PCF can now commence deposit taking activities as a fully-operational bank

© Proactive Investors 2017

Proactive Investor UK Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use