Investing.com -- Man Group (LON:EMG) on Thursday topped expectations for client inflows in the first quarter, but a weaker outlook on assets and fees weighed on investor sentiment, sending the stock down more than 2% on Thursday.
Assets under management rose to $172.6 billion as of 31 March, up from $168.6 billion at the end of December and ahead of the $171.1 billion consensus.
Net inflows of $3.6 billion beat analyst expectations of $1.4 billion, led by $3.2 billion into discretionary long-only strategies, particularly in liquid credit products such as high yield and investment-grade debt.
However, the quarter also saw a $1.1 billion drag from investment performance, mainly due to losses in absolute return and alternative strategies.
AHL Diversified fell 7.9%, and AHL Evolution declined 4.6%, contributing to a $1.5 billion performance loss in each segment.
Systematic and total return strategies posted modest gains, helping lift total long-only AUM to $72.8 billion. Discretionary long-only strategies rose to $33.2 billion, reflecting continued demand for credit.
Despite the strong start to the year, Man Group cut its guidance. As of 14 April, AUM was estimated at $167 billion, below Visible Alpha’s $171 billion consensus for June.
The company cited negative mark-to-market moves, including a roughly 5% drop in AHL strategies so far in April.
Management fee revenue run-rate was guided at $1.02 billion, below consensus estimates of $1.079 billion and Morgan Stanley’s $1.04 billion. Analysts expect performance fees to also come under pressure given weak second-quarter performance trends.
“Despite the Q1 beat, Q2 fund performance points to significant negative revision risk to consensus via lower management and performance fees, with the sales pipeline also uncertain,” Jefferies analysts said in a note.nava