GLG’s ‘difficult year’ delivers loss for Man Group

A ‘difficult year’ for Man Group’s discretionary management arm GLG, saw the hedge fund group post a pre-tax loss in 2016 despite a 3% increase in its total funds under management (FUM).

GLG's ‘difficult year’ delivers loss for Man Group

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Man Group reported a loss in 2016 of $272m in statutory profit before tax on Wednesday compared with a profit of $184m for the previous year.

The company pointed to an “unforgiving” market environment and the poor performance of GLG where alternative and long-only strategies saw significant outflows in the first half of the year.

Funds under management (FUM) at GLG fell by more than $3.5bn between 2015 and 2016 to $26.7bn (£21.5bn), with the CEO of Man Group, Luke Ellis, blaming the “challenging environment for discretionary investment management” last year.

As a whole Man Group, the world’s largest publicly traded hedge fund company, saw FUM rise 3% to $80.9bn, and reported net inflows of $1.9bn, but the drag effect of GLG resulted in the losses.

In his CEO review, Ellis said it was a difficult year for GLG, and added: “This is evident with the $281m impairment of GLG’s goodwill and intangibles, which reflects the lower FUM and management and performance fee revenue.

“GLG’s performance has been variable in recent years and this resulted in continued outflows during 2016, although these did moderate in the fourth quarter as performance improved.”

The flagship Equity Long Short Strategy saw improving performance in the second half of the year, but still ended the year at -1.4% with alternative strategies underperforming their benchmark HFRI indexes.

However, Ellis hopes the appointment of Pierre-Henri Flamand as CIO for GLG last September, a restructuring of the risk team and the closure of some underperforming strategies could signal the beginning of a turnaround in the investment manager’s fortune.

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