Q. The hedge fund industry saw its first ever net outflows in 2008. Has the rationale for investing in hedge funds changed?

A. Hedge fund assets under management (AUM) fell by some 25% in calendar year 2008. In the first quarter of 2009, hedge fund performance returned to positive territory, which we see as a good leading indicator for a return to AUM growth.

We see the investment case for hedge funds as being very much intact, with the key themes of diversification and non-correlated returns continuing to resonate with investors. Hedge funds in general recover more quickly after a drawdown than conventional asset classes, and provide better liquidity than other alternative asset classes such as private equity and property. Man's strategy mix, with its weighting towards the managed futures style, excels at providing the liquidity, transparency and uncorrelated performance prized by investors. Find out more...

Q. Are lower management fee levels inevitable?

A. In our private investor business, Man has a long-term track record of delivering the attractive, uncorrelated returns investors are seeking from hedge funds. Thus, we do not expect fee pressure in this area.

In the fund of funds industry, there is ongoing management fee pressure. In Man's institutional business, this is partially offset by recent performance disparities between fund of funds offerings, with RMF outperforming the benchmark, and by our ability to deliver distinctive, customised solutions to institutional investors. Find out more...

Q. How will greater regulatory scrutiny affect Man?

A. Greater regulatory scrutiny will clearly increase barriers to entry in our marketplace. Man is already fully regulated, on a consolidated basis by the FSA, and by national regulators wherever we have offices - currently we operate from 19 separate locations. As a consequence, we have the infrastructure and expertise in place to handle existing regulations and respond to increased regulatory scrutiny. Find out more...

Q. Can you continue to deliver guaranteed products in an environment of constrained funding and low interest rates?

A. One of the key strengths of Man's business is our ability to adapt our product line to meet investor demands in changing market conditions. In the short-term, we will respond to investor demand by focusing our guaranteed product launches around AHL and other liquid content, to provide liquidity, transparency and performance, in a structure with low cash intensity and little to no reliance on external leverage. Looking more broadly, we will retain access to funding because the size of our operations makes us relevant to our funding providers, whose relationships with us extend beyond product funding into distribution, provision of guarantees and corporate relationships. Last but not least, the strength of our franchise in Japan demonstrates the attractiveness of our products in a low interest rate environment. Find out more...

Q. Do you worry about over reliance on AHL?

A. The liquidity, transparency and uncorrelated returns provided by AHL and the managed futures style continue to be extremely popular with investors, and we see plenty of new potential for generating returns. Therefore, we are comfortable with the strategy of focusing product launches in the short-term around AHL. Our long-term objective remains to offer a broad range of investment styles to attract a higher proportion of investor assets. Find out more...

Q. Your decision to de-risk the MGS product line caused a significant reduction in funds under management. Why did you do this?

A. The MGS product line was exposed to under-performing strategies, which continued to lose money until the end of 2008. So from the product investors' viewpoint, the MGS de-risk was a logical investment management decision which achieved its objective of protecting investor capital.

The MGS de-risk was the single largest contributor to the reduction in FUM this year. Reported FUM represents our total investment exposure - investment equity, notional exposure (principally in the futures markets) and external leverage - which meant that a steep reduction occurred when external leverage was removed and product content (including managed futures) was re-balanced to preserve product mandates.

It was testament to Man's infrastructure that we were able to achieve the de-risk in such an orderly fashion under extreme market conditions.

Q. What impact has your involvement in the Madoff fraud had on your business?

A. Man had a $360 million indirect exposure to Madoff through its predominantly institutional fund of funds business, RMF. We worked hard to communicate the extent, implications and actions taken as a result of this exposure to our investors. Further, as part of our ongoing commitment continually to enhance and refine our due diligence procedures (either as a consequence of market events or evolving best practice) we have made a number of improvements to our underlying processes and procedures. Find out more...

Q. Is the fund of funds model sustainable?

A. Yes. There will be continued demand for fund of funds that provide diversification benefits through strong due diligence, manager selection and combination, and risk management.

We are building an integrated hedge fund management business that combines the strengths of RMF, Glenwood and MGS, and will give us a highly competitive, large scale fund of funds offering.

Q. You have seen your share price decline by over 50% in the last financial year. How concerned are you?

A. As substantial shareholders ourselves, and with employee compensation heavily weighted towards share ownership, our interests are strongly aligned with those of our shareholders. We remain focused on generating long-term value by taking the right actions to protect and grow our franchise.

Q. Is your current dividend sustainable?

A. The Board took the decision to maintain the current year's dividend at 44 cents per share based on Man's earnings generation and business performance in the year, and the strength of our balance sheet. These, along with earnings outlook, will remain the criteria by which future dividend decisions are made.

Q. How do you intend to retain and motivate your staff in an environment of lay-offs and reduced bonus payments?

A. Man is essentially a people business, and our employees have shown extraordinary commitment and professionalism through a challenging year. In March, we took the difficult decision to reduce headcount by 15% to reflect the reduction in funds under management. Nevertheless, Man remains an attractive and stimulating company to work for, with competitive remuneration, a strong reputation and a long-standing commitment to corporate responsibility, which our employees value. The launch of our new hedge fund management business will stimulate further change in our business, and I am delighted with the way the teams involved are responding to this latest challenge. Find out more...