Man formed a partnership with a large institution which primarily invests in single managers and holds in excess of $50 billion in total assets. Under the terms of the relationship, Man provides strategic counsel and industry guidance, with the initial solution comprising a portfolio of managed futures and global macro strategies. The scope of the mandate was subsequently extended to include a customised portfolio of real assets (commodities, energy and real estate), with the funds under consideration rising to $500 million from an initial $100 million.
We reached a three-year agreement with the Universities Superannuation Scheme, the UK's second largest private-sector pension fund, to allocate up to $1 billion through Man's managed account platform. Man will provide advisory services in hedge fund research, operational due diligence and risk management, with the client maintaining responsibility for manager selection.
The mandate was awarded following a rigorous selection process, with the client citing Man's impressive risk management processes and depth of expertise as being key factors in their decision.
Until recently, many investors wishing to access alternative investment strategies have been prevented from doing so because of high minimum contributions, long lock-up periods and offshore fund domicile. The UCITS III framework addresses most of these issues, simultaneously expanding the range of options available and enhancing diversification potential for many investors.
We expanded our UCITS business in 2010 with Man AHL Trend and Man AHL Diversity, UCITS III versions of our successful AHL programme. Most recently, a fund providing exposure to first class equity long/short managers trading European equities has been launched, which complements our Multi-Manager offering and allows us to offer a compelling alternative to traditional long-only equity strategies.
The expansion of our UCITS funds range reflects Man's ability to combine hedge fund structuring and legal expertise with a deep knowledge of the evolving UCITS framework, which we have been actively developing since the launch of our first UCITS product in 2008.
From a strategic perspective, the expanded distribution potential conferred by UCITS products constitutes a major opportunity for Man to increase assets under management. As they are classified as 'mutual funds' from regulation and settlement perspectives, UCITS hedge funds can be marketed through mainstream channels and fund platforms, opening up a new segment of the intermediary network for Man to penetrate. In the aftermath of the events of 2008 and the 'lost decade' for (long-only) equity investment, the mutual fund market is seeking a viable alternative to traditional funds and this appetite for alternative strategies is shared by the intermediary community.
Non-European investors now view UCITS III as a high quality global brand, and UCITS funds are increasingly seeing interest from investors in Hong Kong, Singapore, Taiwan and the US. Man, through its extensive distribution network, is therefore exploring opportunities and strategies to promote our UCITS funds outside Europe.
Man has built a pre-eminent position in the Australasian market, with over 116,000 investors in 34 funds and compound annual returns of 15.6% from its flagship Australian product – Man OM-IP 220 Limited. It is now the largest provider of structured alternative investment products for private investors in the region and benefits from an expanding institutional business.
Recently, Man has extended its product offerings in Australasia by structuring and launching a series of open-ended and non-guaranteed funds, as well as developing on-shore Australian unit trusts.
The Australian investment industry is supported by regular flows of money stemming from the compulsory superannuation legislation, which requires all Australian workers to contribute 9% of their salary to their own pension plan. As such, private investors are very receptive to alternative strategies and this constitutes a significant growth opportunity for Man.
