Man Group gains despite 'disappointing' flows in Q1

Investment management firm Man Group said that the first quarter was 'disappointing' from a flows perspective as funds under management declined over the three-month period.

However, shares rose strongly on Friday morning after the company said that 2013 earnings per share would be helped by a change in its regulatory status, announced earlier last month, from being a Full Scope Group to a Limited Licence Group.

This boosted the firm's surplus regulatory capital by $550m and it will now call or redeem all tier-one hydrid, tier-two and senior debt securities "to optimise the efficiency of the group's capital and liquidity structure". The changes will result in annualised pre-tax interest and coupon savings of up to $78m from 2014.

The stock was up 8.43% at 115.26p by 08:33.

Funds under management (FuM) totalled $54.8bn by the end of March, down from $57bn at December 31st 2012 as inflows of $2.8bn were offset by outflows of $3.7bn and negative foreign exchange movements of $1.6bn.

Chief Executive Officer Manny Roman, who took the helm at the February, said that investment performance is the "lifeblood of our business" and he expects a good performance to translate into flows "in time".

However, he said that Man will need to see a more "sustained period of performance, particularly from AHL, before we see an improvement in net flows". AHL, the group's quantitative managed futures manager, and the GLG fund both registered outflows of $0.6bn each in the first quarter.

"The world economy still faces significant challenges but with reduced correlation between major asset classes and the reassertion of trends, we have seen a somewhat more stable market environment. Against this background, we saw solid performance across our three investment engines," Roman said.

"However, this was a disappointing quarter from a flows perspective with sales at a similar level to the previous quarter and increased redemptions, chiefly due to the loss of three sizeable low margin mandates."