Man Group Plc, the world's largest publicly traded hedge-fund manager, is shutting a range of products aimed to protect clients from losses after they failed to meet performance targets.
The company decided this month to shut Man Vision Ltd., a $40 million pool that sought to generate returns of more than 10 percent annually, according to an Aug. 12 letter sent to clients and obtained by Bloomberg News. Man Group is also closing similar offerings that, like Vision, were tied to the performance of AHL Diversified, the firm's biggest hedge fund, said a person with knowledge of the moves who asked not to be identified because they aren't public.
AHL, a $14 billion hedge fund that uses computer algorithms to try to profit from trends in asset prices, has been hurt after the U.S. Federal Reserve roiled markets earlier this year by indicating that it may taper its bond purchases. Guaranteed products based on AHL and other hedge funds are Man Group's most profitable offerings, because they levy fees that can be more than twice what the industry typically charges.
“They definitely have the highest margins and that's due to large management fees and because AHL is run by a computer that's not demanding a bonus at the end of the year,” said David McCann, an analyst at Numis Securities Ltd. in London who has a sell rating on Man Group. Still, “no one has wanted to buy these products in the last three to four years” because the returns have been lackluster.
Vision, which totaled about $160 million a year ago, fell about 5.6 percent in the first half of 2013, according to data compiled by Bloomberg. The fund has lost about 12 pe
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