Institutional trends
Increasing investor appetite for managed accounts (MACs) has been a dominant feature in our institutional business in the last year. By virtue of Man's long-standing industry presence and excellent reputation, the business continues to benefit from a strong negotiating position in securing scarce capacity and MAC agreements. Throughout the year, Man has focused on the ongoing development of its MAC capabilities while continuing to adhere to a 'quality over quantity' philosophy.
In addition to concerns over transparency, the 12 month period has been one in which institutional investors have increasingly focused on the mechanics of investment. Man is singularly placed to add value in respect of more sophisticated reporting and the delivery of educational materials through its exceptional resources in quantitative analysis, risk management and client service.
In terms of strategic developments, it has been a busy period, with a number of new initiatives and developments having already borne fruit while others will promote future asset-gathering. In Europe, Man formed a strategic alliance with Credit Suisse, which harnesses our investment management experience while utilising Credit Suisse's knowledge of their clients' structuring requirements and financing expertise. Man has also sought to cement its position in the US with new senior appointments taking responsibility for institutional sales and private clients. In Japan, we have been successful with single manager distribution to institutions, particularly pension funds. Beyond Japan, Asia is seen as a largely untapped market for providers of alternative investments and considerable energy has been devoted to a series of events in Hong Kong, Singapore and Korea, where opportunities in managed futures, equity long/short and distressed strategies were highlighted. Man ends the year with $1.5 billion of new institutional mandates, which are to be included in funds under management in the coming quarters.
New market case study: How Man was first into Taiwan
On 10 August 2009 Man, together with its strategic partner Cathay Securities Investment Trust, launched the first fund of futures funds to retail investors in Taiwan – known as the Cathay-Man Fund. This followed almost two years of intensive work with both Cathay and the Securities and Futures Bureau (SFB) to structure a fund which would comply with new futures fund regulations.
In accordance with those regulations, the structure of the Cathay-Man Fund had to be an onshore New Taiwan dollar denominated trust that must invest in five or more publicly available futures funds.
As Man has offered AHL funds to retail investors in jurisdictions such as Hong Kong, Australia, New Zealand, Ireland, Guernsey and Japan since 1996 we were in a unique position to be able to structure the Cathay-Man Fund to comply with these regulations.
Working in conjunction with Cathay in discussions with the regulator, Man played an important role in explaining AHL, including the use of leverage, risk management and extensive support infrastructure. Given that discussions took place with the global financial crisis as their backdrop, the regulator needed to be provided with commensurate levels of comfort to allay investor concerns.
The Cathay-Man Fund has been distributed through Cathay's extensive distribution network and was also supported by securities companies, retail banks and insurance companies. Extensive training was provided to all these distribution channels as most had not had any previous dealings with Man products.
The Cathay-Man Fund was the first fund of futures funds to be approved under the new regulations allowing onshore distribution to retail investors and it generated a great deal of interest in the media, as well as from financial intermediaries. At the end of the initial two week offer period, subscriptions of $163 million had been received by Cathay.
The fund has provided Man with an opportunity to work with a new strategic partner in Taiwan and provide retail investors with access to the AHL Diversified Programme. We were delighted with the success of this first onshore product in Taiwan and look forward to further co-operation with our new strategic partner in this country.
