Man Group Posts 2016 Loss on Fee Decline, Writedowns

Man Group (EMG.L), a UK hedge fund manager, posted a pretax loss for 2016 after a profit in the previous year as “unforgiving” market conditions in the first nine months eroded performance fee revenue and the company took impairment charges at some of its funds.

Statutory loss before tax was $272 million in 2016 compared with pretax profit of $184 million in 2015, the company said on Wednesday on its website. The loss was driven by the impairment of goodwill and intangibles at its GLG and FRM units of $281 million and $98 million, respectively.

The hedge fund manager’s adjusted profit before tax fell to $205 million from $400 million in 2015, it said and net revenue fell to $803 million from $1.09 billion. Revenue from performance fees fell to $112 million from $326 million. In a bright spot, funds under management rose 3% to $80.9 billion.

“The market environment was very unforgiving for the first three quarters and Man found it difficult to generate
performance for clients and performance fees,” Luke Ellis, chief executive officer, said in a statement. “This led to disappointing profits.”

For 2017, the company “started the year with a good pipeline of interest from clients and encouraging performance across most of our strategies as the new global political environment has created many alpha opportunities,” Ellis said. “But it remains early days in an uncertain market.”

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