LONDON (Reuters) - British hedge fund firm Man Group (EMG.L) said net inflows, positive market moves and the impact of a recent acquisition helped to boost funds under management by 10 percent in the first three months of the year.
Man shares rose four percent after the figures came in ahead of consensus expectations. Hedge funds generally attracted more investor cash in the first quarter as interest rate rises and increased volatility provided more fertile ground for the industry after a tough 2016.
Total assets under management at the end of March were $88.7 billion (£69.45 billion), up from $80.9 billion at the end of December, the world's largest listed hedge fund said in a statement.
"We came into the year with a good pipeline of interest from clients, and that has resulted in net inflows of $3 billion in the first three months," said Luke Ellis, Man Group Chief Executive.
Man Group suffered a loss in 2016 when performance fees fell due to tough markets.
However, the brightening outlook has helped to drive the fund's share price more than 25 percent higher this year.
Net inflows exceeded expectations and were the strongest since June 2011, according to research from Morgan Stanley and Goldman Sachs.
"Man benefitted from a $1.4 billion mandate win this quarter. Even stripping this out, Man saw its second-strongest gross sales in five years," said the Goldman note.
Investors putting cash to work with hedge funds had started picking up pace since the start of the year, industry tracker Eurekahedge, which said net inflows came in at $26.1 billion.
Man's long-only funds, which aim to profit when markets rise, and its fund of funds business, FRM, took in the bulk of new assets, with net flows of $1.4 billion and $1.2 billion, respectively. FRM invests in other funds.
Man made gains in 24 out of 30 strategies, delivering 14.4 percent and 11.5 percent improvements quarter-on-quarter in its top-performing Numeric emerging markets funds.
Positive investment performance added a further $2.2 billion, with long-only strategies contributing $1.9 billion and its alternatives strategies $400 million.
The completed acquisition of U.S. and Europe-based real asset manager Aalto, meanwhile, added $1.8 billion.
Reporting by Maiya Keidan; editing by Simon Jessop/Keith Weir