In the aftermath of the global financial crisis investors and their advisors have become extremely cautious. As a consequence, the credibility of counterparties has been called into question and their conduct during the crisis has become the subject of intense scrutiny.
Man has been far from immune to the effects of the financial crisis, but has emerged with its strong investment brand intact. We worked hard to maintain liquidity for our clients, and to sustain close relationships with excellent client service and proactive communication. Man has the experience, financial strength, infrastructure and scale to take advantage of the new opportunities that have arisen as a by-product of the crisis and the ensuing industry consolidation. We are confident that the manner in which we have reacted to the crisis, the way the business is positioned, our ability to deliver the right products and our international sales presence will result in significant asset growth.
Private investor trends
While Man's guaranteed products proved to be generally robust throughout the crisis, this was not necessarily the case across the industry as a whole. As a consequence, market perception has been tarnished. With time, we expect to see renewed demand for robustly structured products from reputable providers, but the current appetite remains muted.
By contrast, the sale of open-ended products has proved much more encouraging. Given difficult trading conditions for CTAs (Commodity Trading Advisors), AHL sales slowed down in the second half of the year. However, there are experienced investors who appreciate that previous drawdowns have provided attractive entry points and the outlook for fund inflows is improving.
Continuous active dialogue with our clients is crucial to building and maintaining relationships and our extensive global presence remains key to our success. The ability to respond promptly – in local market hours – fosters closer working relationships with our partners. Our sales force backed by experienced in-house client service teams – 600 people in total worldwide – are in constant contact with existing and potential clients. In Japan for example, up to 100 product seminars are conducted prior to a product launch, and around 200 performance reporting sessions are run every year. This is a resource-intensive but differentiated approach.
Conducting business locally provides us with a good feeling for the individual needs of regional investors, which is important when one considers the significant increase in demand for onshore regulated formats. This, coupled with the depth of Man's structuring experience and execution capabilities, means that we are well placed to benefit from the expansion of this sector. While Man has a long track record of reaching onshore markets, including areas such as Japan, Australia, Canada, Switzerland and Hong Kong, the new wave of 'onshorisation' has been significant and we are well placed to participate.
There are numerous initiatives in this area. We have been able to deliver AHL in a UCITS format which opens up exciting new market opportunities for us in Europe and beyond, given the international recognition afforded to this format. We are also launching a European focused long/short equity product and have others in the pipeline. UCITS has meaningfully opened up the UK onshore market to us and we have other lucrative onshore jurisdictions firmly within our sights. We were also recently the first company to launch an onshore regulated investment fund in Taiwan. Additionally, we have been able to reach the Brazilian onshore market through a product launched with local partners and, having been briefly sidelined due to regulatory changes, we have re-established a firm foothold in the potentially lucrative mass retail market in Canada. New structures are also in place to tap segments of the Australian onshore market which are not already covered.
The onshore market usually means moving out of the private placement space and into the mainstream retail arena, where barriers to entry are high and there are complexities surrounding product structures, such as the need to provide stipulated liquidity terms. A comprehensive level of pre and post sale client service is also required. The core attributes at the nucleus of the Man business model mean that we are ideally placed to overcome such obstacles and establish a competitive presence in this fast-moving market segment.
