ii view: Man Group confirms record assets under management

A diversified product offering and forecast dividend yield of around 5%. We assess prospects. 

Full-year results to 31 December 2021

• Assets Under Management up 20% to $148.6 billion
• Profit before tax of $590 million, up from $179 million in 2020
• A final dividend of 8.4¢ per share
• A total dividend of 14 US cents per share for the year

Chief executive Luke Ellis said:

"These results demonstrate the potential of the firm we have built and its ability to deliver growth. Our diversified range of products and longstanding client relationships, combined with our diverse talent pool and cutting-edge technology, define Man Group, underpin our strategy and give me great confidence in our ability to continue to deliver value for our clients and shareholders."

ii round-up:

UK hedge fund manager Man Group (LSE:EMG) today reported record Assets Under Management (AUM) of $148.6 billion, buoyed by both new monies to management and investment gains. 

Profit for the year to the end of December beat City expectations, helping push a near one-third increase in the total full-year dividend to 14 US cents per share. 

Man Group shares rose by more than 2% in UK trading, leaving them up by more than 70% since pandemic market lows in March 2020. Shares for rival fund manager M&G (LSE:MNG) are up by a similar amount. Man Group shares year-to-date are down by over 10%, similar to the fall in the FTSE 250 index. 

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Man Group’s managed funds are split roughly 60:40 between alternative investment strategies, some with the ability to go short, and more traditional long-only or buy and hold funds. 

AUM for the FTSE 250 company rose by a fifth over the year as net inflows grew by $13.7 billion. Investment gains of $12.5 billion also contributed. 

Man's strongest ever net inflows for third and fourth quarters was also helped by 1.9% in asset weighted relative investment outperformance. Its 50 largest clients are invested in an average of four of its fund strategies.

Core earnings per share for the year more than doubled to 38.7 US cents. As of late February, it had completed $88 million of its $250 million share buyback announced in December. 

ii view:

Man Group has a history dating back over 200 years. Today it has more than 25 years of experience in global investment management. Institutional investors contribute around four-fifths of its funds under management. 

For investors, the combination of economic, pandemic and geopolitical outlook concerns offer a tough backdrop. Expected interest rate rises could push investors back towards deposit accounts and away from stock markets. Ultra-low interest rates have arguably been supportive for all asset managers. Moves to low-cost exchange-traded funds (ETFs) and high levels of competition across the asset management sector are also worth remembering. 

But product variation and the use of computers to help manage its active funds helps set it apart from rivals. Investment in technology remains ongoing, while a continued share buyback programme offers support. In all, and with the shares sat on an historic and estimated future dividend yield of around 5%, income investors are likely to stay interested.  

Positives: 

• Ongoing share buy-back programme
• Attractive dividend yield (not guaranteed)

Negatives:

• Factors outside of its control such as foreign exchange movements can hinder performance 
• Dividend payment linked to adjusted management fee EPS which can fluctuate

The average rating of stock market analysts:

Buy