By Nell Mackenzie
LONDON (Reuters) -Hedge fund Man Group raked in its highest performance fees last year since before the financial crisis as falling stocks and bond markets and a slew of central bank rate hikes boosted trading opportunities for its funds.
Shares in the British company jumped as much as 10% in early Tuesday trading as investors cheered the 6% growth in fees to $779 million, which came in a quarter higher than analyst forecasts, and an 18% increase in full-year core pretax profit.
Assets under management dipped 4% to $143.3 billion in the year to end-December, also beating analyst expectations, after a rise in net inflows in the fourth quarter.
Finance chief Antoine Forterre told Reuters volatile markets helped his firm, which can make money when asset values fall as well as rise, meaning bigger returns for its top strategies.
Man recorded net inflows of $3.1 billion for 2022, down 77% from a year earlier, but 5.3% higher than the average in the wider fund industry.
The company also said it would kick off a new $125 million share buyback programme when it has finished the current one, which is 91% complete.
A September rout in British gilt markets drove many UK pension funds to scour for cash, after investments into liability-driven investment (LDI) funds resulted in billions of pounds worth of collateral calls.
Many pension funds reached for profitable investments they had elsewhere, like hedge funds as well as investments into collateralised loan obligations.
“LDI was one of the headwind factors which impacted clients and we saw increased redemptions in the end of the third quarter going into the fourth,” said Forterre.
Some of the strategies from which investors withdrew money were posting double digit returns at the time, he added.
“For us, from UK defined benefit pension schemes we are currently seeing inflows, not outflows, this year and I think the need for liquid alternatives in their portfolio has gone up, not down,” said CEO Luke Ellis on an investor call. He declined to say how much money he’d seen back from pension schemes this quarter.
Separately, Man said its chairman John Cryan had decided to retire from the board towards the end of 2023. Anne Wade, a non-executive director since April 2020, will succeed him.
(Reporting by Nell Mackenzie Editing by Sinead Cruise and Mark Potter)