Man Group benefits from falling equities

Man Group, the world's largest hedge fund manager, yesterday raised expectations about how well it has done in the past 12 months, in contrast to the flow of gloomy results emanating from conventional fund managers.

Man Group has seen big demand for its hedge fund products as investors have fled depressed equity markets. Its flagship AHL managed futures products returned 12 per cent in 2002 when major equity markets fell more than 20 per cent.

Stanley Fink, the chief executive, said: "We are still making hay while the sun shines." He added that his company has benefited from the huge amounts of volatility in global stock markets in recent weeks. Man's shares rose 5.5 per cent to 969.5p.

In a trading statement ahead of its full-year results to 31 March, Man said it had made $6bn (£4bn) of sales last year, which would feed through into profit this year.

"The $6bn of sales is more than the funds we had under management three years ago. We have seen a huge amount of inflows," Mr Fink said.

Man is set to outpace forecasts for 2002 by 15 per cent. Analysts were predicting profits of between £260m and £337m. The company now has more than $25bn under management.

The company has managed to avoid most of the pitfalls of the hedge fund world and largely does not invest in exotic vehicles and markets.

The company said net performance fee income would be more than twice last year's level and net management fee income up 50 per cent, reflecting the strong performance of most of its funds.

Man Group has not been immune from the choppy markets. One of its core managed futures hedge fund products – the $190m AHL Diversified Futures fund – dropped 10.5 per cent the week before last and 3.6 per cent last week after being hit by the oil price decline.