Performance fees drive 38% rise in Man Group profits

Performance fees have helped drive a 38 per cent rise in profits at Man Group for the first six months this year, but revenue margins have fallen over the period due to new mandates the asset manager has taken on over the period.

Across the group, which specialises in alternative assets, revenue from performance fees more than doubled to $83m compared to $40m for the same period last year. Man GLG, the group’s discretionary business, saw performance fees increase to $22m compared to $1m for the same period last year.

Funds under management at the asset manager have increased 19 per cent to $95.9bn compared to $80.9bn at the start of the period.

Statutory profit before tax was $76m, while adjusted profit before tax increased by 48 per cent to $145m.

Man chief executive Luke Ellis says despite growth across all investment managers the revenue margin has compressed due to winning several low margin mandates.

“The first half was unusual in both the scale of net inflows, and the level of margin compression. We would expect both to moderate in the second half, particularly given the uneven nature of institutional flows.”

Sales and redemptions were both up in the first half of 2017 with $17.5bn inflows, up 79 per cent compared to the first half of 2016, and $9.3bn outflows, slightly up from $8.8bn a year earlier.

The largest single redemption was $400m.

In GLG, the largest strategy, Japan CoreAlpha, was up 2.9 per cent for the period underperforming the Topix by 4.4 per cent, but still attracting net inflows.

However, the UK Undervalued Assets strategy was up 15.1 per cent, outperforming the FTSE all share by 9.6 per cent, and the Strategic Bond strategy was up 7.3 per cent outperforming its Libor benchmark by 7.1 per cent. 

Man Group net flows H1 2017

$bn FUM at 31 December 2016 Net inflows/ (Outflows) Investment movement FUM at 30 June 2017
Alternative 46.3 3.7 0.4 52.8
Quant (AHL / Numeric) 19.6 1.3 0.1 21.1
Discretionary (GLG) 13.9 (0.9) 0.2 13.5
Fund of funds (FRM) 12.8 3.0 0.1 16.2
Global Private Markets 0.3 2.0
Long Only 34.2 4.5 3.4 42.8
Quant (AHL / Numeric) 21.4 1.0 2.6 25.1
Discretionary (GLG) 12.8 3.5 0.8 17.7
Guaranteed 0.4 0.3
Total 80.9 8.2 3.8 95.9