Fund differentiation, an ongoing share buyback scheme and a dividend yield over 4%. Buy, sell or hold?
First-quarter trading to 31 March
Chief executive Luke Ellis said:
"I am pleased we have delivered another quarter of growth, with FUM increasing by $3.4 billion to reach $127 billion. This reflects both investment gains for our clients and continuing net inflows and underscores the strength of our business model.
"Client engagement on a number of larger mandates has been positive this year, and as a result we expect to see increased inflows in the coming quarters. In the long term, it is our state-of-the-art technology and the strength of our client relationships combined with the quality of our people that define our firm and give me great confidence for the future."
UK hedge fund manager Man Group (LSE:EMG) today offered a positive outlook for fund inflows over coming quarters as it reported a near 3% quarterly rise in Funds Under Management (FUM).
Total FUM for the London headquartered manager came in at $127 billion as of the end of March, up from $123.6 billion back at the end of December.
Man Group shares rose marginally in early UK trading, leaving them up by more than 50% since pandemic lows in March last year. Shares for rival fund managers Schroders (LSE:SDR) and Standard Life Aberdeen (LSE:SLA) are both up by more than 60%.
A fund net inflow over the first quarter of $0.6 billion, mainly into its alternative strategy funds, added to investment gains of $3.5 billion predominantly for its long-only mandated funds. Negative currency and other movements to the tune of $0.7 bullion, largely the strength of the dollar against the euro and yen, hindered the rise.
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.
Net inflows into its specialist alternative investment strategy funds totalled $0.8 billion over the quarter. More commonly found at rival fund managers, long-only funds endured a $0.2 billion net outflow over the period.
A total of $49 million from its $100 million share buyback programme announced back in September had been used by the 31 March.
First-half results to the end of June are scheduled for 30 July.
The company has a history dating back over 200 years. Today it has more than 25 years of experience in global investment management. It has office from New York, to London, Switzerland and Shanghai in China.
An ultra-low interest rate environment pushing investors away from cash and into other assets continues to provide a supportive backdrop for all asset managers. Man’s differing styles of management also help it differentiate from other investment managers.
For investors, a backdrop of pandemic uncertainty, vast central bank intervention and stretched government borrowings almost globally is not to be forgotten. But product variation and the use of computers to help manage its active funds helps set it apart from some rivals. An estimated forward price/earnings ratio of under 10, compared to a sector average of around 12, also suggests the shares are not expensive, while an ongoing share buyback programme and a forecast dividend yield in the region of 5% is not to be dismissed. In all, the risk reward balance arguably looks to remain in Man Group’s favour.
- Ongoing share buy-back programme and dividend payment
- Managing costs and diversifying product offering
- 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:
These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.