Man Group’s $12.1bn AHL investment funds have risen sharply over the summer as the listed hedge fund manager’s much criticised computer-driven trading strategies continued to stage a robust recovery.
The strategy’s largest sub fund, AHL Diversified, which uses “black box” algorithms to make money from following trends across various markets, is up 17.6 per cent so far this year.
At the same time AHL Evolution, a newer strategy that also uses Man’s computer trading system, has told its investors in a letter sent on Friday that the $3.5bn fund now “soft closed” to taking new money after strong performance has led to a sharp rise in new inflows.
The performance marks a strong turnround for the AHL strategies, which suffered several gruelling years when low interest rates weakened the relationships between markets that the computers driving such hedge funds had previously exploited to make money.
All four of the AHL strategies run by Man have performed better than the London-based hedge fund’s main rivals so far this year, with AHL Diversified doubling the 6.4 per cent return of BlueCrest’s Blue Trend, and eclipsing a 2 per cent return for Winton’s main fund. Cantab, another UK rival, has seen its main fund rise 2.3 per cent so far, according to figures from late August.
Man Group has made significant efforts to recalibrate its models after central bank action threw many algorithm based hedge funds into turmoil. AHL’s earlier woes raised significant doubts among analysts and investors in Man’s shares over its ability to recover lost performance fee income and stem outflows.
AHL Evolution, which has grown steadily in size after rising 16.9 per cent last year and 23.6 per cent in 2012, was designed in part to allow AHL’s infrastructure to trade in markets that are less correlated to central bank policy, such as more geographically remote corners of equity markets.
Under Emmanuel “Manny” Roman, who took over as Man chief executive last year after joining the group when it bought the hedge fund GLG Partners in 2010, the hedge fund has moved to diversify its assets under management away from the three quarters that reside in Europe, the Middle East and Africa.
Last week Man closed its acquisition of Numeric Holdings, a Boston-based quantitative equity manager with $14.7bn of assets under management, and earlier this year it bought Pine Grove, another US-based hedge fund.
During the first half of this year Man’s gross fund sales rose 91 per cent to $12.4bn year on year, with total assets under management rising 7 per cent to $57.7bn. Miles Johnson