Money managers under the microscope
There has been plenty of bad news surrounding Man Group in recent months.
Assets at end-June were $43.3 bln, compared with $79.5 bln a year before. Flagship managed futures strategy AHL, which not so long ago was boasting some superb-looking performance figures in spite of the credit crisis, is down 5.1 percent over the past year after a poor first half of 2009.
And Man Group’s shares have underperformed the market by 44 percent over the past year, though they have outperformed during 2009.
However, according to Neptune fund manager Jeremy Smith, who has recently bought shares in Man Group, equity investors are being too downbeat about the industry’s prospects.
“A lot of fund managers have written off the hedge fund industry, but from anecdotal evidence it seems a lot of money is being raised. Valuations (in the sector) are extremely low.”
Last year’s record poor year for the hedge fund industry was a boom period for managed futures.
Reports of potential shareholder unrest at Man Group.
A Times article reports on fund manager anger over an “arms race” in executive pay and juxtaposes this against Man CEO Peter Clarke’s $14.4 mln pay.
It says several institutional investors it contacted “said that they had not yet decided whether to protest over remuneration at Man”.
Brevan Howard Asset Management, Europe’s biggest hedge fund firm, has posted a 133 percent rise in operating profits to an astonishing 503 million pounds for the year to July 2008, demonstrating the benefits of being one of the (few) winners in last year’s market turmoil.
While the average hedge fund lost 19 percent last year, according to Hedge Fund Research, Brevan Howard’s main fund rose 21 percent.
Hedge fund boutique ISAM (International Standard Asset Management) today revealed another big-name hire with the recruitment of former RAB Capital director and former Renaissance Investment Management co-CEO Rod Barker.
Last year ISAM recruited one of the best-known names in the hedge fund industry in the form of Stanley Fink, former CEO of Man Group, as well as former Labour party chief fundraiser Lord Levy, who hit the headlines in 2006 when he was arrested in the “cash-for-honours” investigation, although no charges were ever filed.
A year ago in its final results Man Group – the world’s biggest listed hedge fund firm — was able to report assets under management of $78.5 billion and a 60 percent rise in profits.
The firm’s shares took a pounding this morning, although have since made up some ground, after the firm revealed assets are now down to $44 billion, while profits almost halved.
Spanish bank BBVA’s move to close down its alternative investment arms including hedge funds shows just how much things have changed in the industry, even within the past year.
Two of the world’s biggest fund managers have decided that it may just not be worth their while being associated with running external fund of hedge fund businesses.
Hot on the heels of news that Barclays Global Investors is considering moving its first and only fund of hedge funds to its wealth management business comes news that State Street Global Advisors quietly wound down its own hedge fund unit State Street Capital Management at the end of 2007, which ran some $3 billion in assets.