Cutting costs and jobs boosts Man Group

Jim Moore
26.03.09 10:38

Shares in the world's largest hedge fund manager surged as plans to slash costs and jobs found favour with investors.

Man Group (EMG) soared 19p to 226.p - the near 10% rise pushing it to the top of the FTSE 100 (UKX) leader board.

On the face of its Man's figures look ugly. The company said in a trading statement ahead of the end of its financial year next week that profits are likely to fall by nearly a half to $1.2 billion from $2.1 billion.

Funds under management have tumbled from $74.6 billion to an estimated $47.7 billion as investments have fallen in value and institutions have headed for the exit.

The performance of the flagship AHL fund - run by a computerised trading programme that follows trends - has also been under a cloud with newswire Bloomberg saying its data showed a 5.5% fall this year against last year's 25% gain.

The company admitted that its RMF fund was down 13.1% although the Man argued that the fund's benchmark was 17.5% lower.

Despite the figures looking gloomy, however, they were no worse than the City had expected and the plans to shake up the company's investment business and integrate it under one banner found favour. The cost cutting programme won further approval. Man plans to save $60 million, which will result in a 15% reduction in staff.

Man also said it would maintain its dividend at 24.8 cents per share, giving a total dividend for the year of 44 cents per share.

This was seen as a sign of confidence and reassured investors. Many companies, particularly in the financial sector, have been forced to cut or eliminate dividend payouts in recent months. Yesterday, life insurer Legal & General (LGEN) slashed its payout by half.

For more on the life insurer's woes, read: Legal & General halves dividend.

Man sought to offer further reassurance on sales, saying it was still winning business from private investors, reporting a net inflow from wealthy clients. They invested a net $2 billion with the company although institutions pulled out $4.2 billion net.

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Cutting costs and jobs boosts Man Group

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