Man Expects Growth In Pre-Tax Profits And Funds Under Management

by Phillip Morton, Investors Offshore.com

31 March 2005

Man Group plc, the world’s largest listed hedge fund firm, has announced that its pre-tax profit forecast for the year ending March 31st 2005 is in line with the top end of market expectations.

Man has reported that sales throughout the year have been strong, and estimated that total sales will reach $11.9 billion by the year’s end, split 51%-49% between private and institutional clients.

Sales for the three months to March 31st are estimated at $1.5 billion, comprised of institutional sales of $0.3 billion, joint ventures (including a major Japanese product) of $0.8 billion, Man's global launch, Man AP Enhanced Series 1, which accounted for $0.2 billion and other private investor sales, mainly relating to open-ended funds, which accounted for $0.2 billion.

Reflecting the level of sales, funds under management have also risen and are currently estimated to be around $43 billion, up from $37.8 billion on March 31st 2004. Of this total, private investor funds are said to make up $25 billion (up from $21.5 billion on March 31st 2004) and institutional funds $18 billion (up from $16.3 billion a year ago).

Redemptions were $4.2 billion which the firm stated remain at the “low end of long term experience.”

Net management fee income is expected to have grown by around 25%, reflecting the increased level of funds under management, while performance fees have been earned by most of Man’s managers in the second half of the year, including AHL, RMF and Glenwood.

However, the firm reported that net performance fee income will be “materially below the level of last year,” as a consequence of a smaller contribution from AHL.

Man’s fully diluted underlying earnings per share are expected to rise by 20%.

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