Man Group recovery stuck after fund's poor showing

Stock markets are mostly on the up and hedge funds are on the mend, but Man Group is still in the mire because of its computer trading program AHL.

The hedge-fund giant, one of the biggest players in the industry, warned today that its assets tumbled by four per cent in the third quarter to $42.4 billion (£26 billion).

The result was blamed on investors taking money off the table and bad returns by AHL, a quickfire trading platform that looks to exploit supposed market inefficiences.

Shares in the company tumbled as analysts digested the figures. The stock slipped 16¾p — or more than five per cent — to 297¾p.

Cazenove said in a note to clients that the asset decline was disappointing "after the optimism that the company had been showing with respect to industry flows, which many had assumed would also benefit Man".

Analysts at Credit Suisse were also critical, saying "we continue to be bearish about Man Group, we continue to believe that the market underestimates the impact of weak investment performance at AHL on future sales".

At its peak in June 2008, the firm managed $79.5 billion.

In sales to private investors, Man Group reported $1.1 billion in gross sales and $1.2 billion in redemptions, resulting in a $100 million net outflow.

Institutions put $400 million of new money in and redeemed $1.4 billion.