Man Group, the world’s biggest publicly traded hedge-fund manager, is shutting a range of products that aimed to protect clients from losses after they failed to meet performance targets.
Bloomberg News reports that the company decided this month to shut Man Vision Ltd., a $40m pool that sought to generate returns of more than 10 percent annually, according to an Aug. 12 letter sent to clients.
Man Group is also closing similar offerings that, like Vision, were tied to the performance of AHL Diversified, the firm’s biggest hedge fund, said a person with knowledge of the moves who asked not to be identified because they aren’t public.
AHL, a $14bn hedge fund that uses computer algorithms to try to profit from trends in asset prices, has been hurt after the U.S. Federal Reserve roiled markets earlier this year by indicating that it may taper its bond purchases. Guaranteed products based on AHL and other hedge funds are Man Group’s most profitable offerings, because they levy fees that can be more than twice what the industry typically charges.
Vision, which totaled about $160m a year ago, fell about 5.6% in the first half of 2013, according to data compiled by Bloomberg. The fund has lost about 12% since it started trading in July 2008.
Vision promised clients that bought a bond issued by Man Group and held it until maturity in 2020 that they won’t lose their initial investment. Credit Suisse provided a guarantee to protect investors against declines in the bonds.
Man Group plans to pull all of Vision’s investments in AHL and other hedge funds by September 1st, moving them into cash and bonds, according to the client letter. Clients can hold their investment until maturity, redeem and lose the guarantee protecting their initial investment, or move their money to another Man Group product at no charge, according to the firm.
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