February 24, 2016 / 9:42 AM / 4 years ago

Rising costs hit hedge fund Man Group's profit

LONDON (Reuters) - British hedge fund firm Man Group said on Wednesday that rising staff costs weighed on its full-year pretax profit, rattling its shares.

Asset managers across the globe have faced a tough time in recent months, with markets roiled by concerns around growth that many expect to continue in the months ahead, although Man’s increasingly broad range of funds had helped cushion the impact.

“The ongoing volatility in the markets in which we operate remains very challenging and, accordingly, the risk appetite of our clients might impact flows,” said Chief Executive Manny Roman.

Losses for several funds in which the group still holds a large stake and higher staff compensation dragged adjusted pretax profit lower to $400 million from $481 million in 2014 and the consensus of around $410-$415 million.

Shares in Man were down 5 percent at 0903 GMT, underperforming in a 0.4 percent weaker FTSE mid-cap index.

The firm posted net inflows of $300 million over the year, but $2.9 billion in the fourth quarter. In addition to assets acquired through acquisitions earlier in the year, this helped total funds under management rise 8 percent to $78.7 billion.

Total assets were also boosted by a positive investment performance for its funds of $2.4 billion, albeit partly offset by adverse currency moves.

Man’s funds under management and flows were in line with its expectations, analysts at Goldman Sachs said in a note, “evidence that management’s strategy of growth and diversification remains firmly on track.”

Man Group proposed a final dividend of 4.8 cents per share to take its total dividend for the year to 10.2 cents, up from 10.1 cents a year earlier.

After the acquisition of Silvermine, Newsmith and the fund of funds business of Bank of America Merrill Lynch in 2015, Man Group said it continued to look at other deals.

Reporting by Simon Jessop, editing by Louise Heavens

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