| London’s Man Group enters ETF arena As readers of our sister publication ETF Express will know, ETFs have gone from strength to strength this year.
Figures from the London Stock Exchange Group show that GBP2.7 billion is invested in ETFs launched this year alone, and over the past 12 months new ETFs have attracted GBP5 billion worth of investments.
Hoping to capitalise on the demand from investors – both retail and institutional – for these vehicles is Man AHL which, along with American Beacon Advisors, is debuting in the ETF market with the launch of an active, quantitative and systematic trading strategy.
Jeff Ringdahl, President and CEO of American Beacon and its parent company Resolute Investment Managers, tells us that the American Beacon AHL Trend ETF is designed to "proactively manage risk while attempting to capitalise on price trends" covering more than 20 of the most liquid global markets across
stocks, bonds, commodities and currencies through the use of derivatives.
ETFS are, according to Man AHL’s Chief Investment Officer Russell Korgaonkar, becoming a "critical component of the investor toolkit, offering essential liquidity in uncertain markets".
No surprise then that the two firms anticipate launching further ETFs in the not-too-distant future "to complement [their] evolving mutual fund line-up".
Essential is not the word to describe absolute return strategies this week, however.
Research from Cerulli Associates reveals a downturn in assets under management (AUM) of Europe-domiciled funds this year of EUR6.1 billion (USD6.6 billion).
The outflows continue a longer-term decline for absolute return strategies that have seen AUM fall by 30 per cent between year-end 2013 and year-end 2022, with investors favouring long-only global equity and fixed income strategies, alongside the closure of Abrdn Gars which had
suffered seven long years of underperformance for retail investors.
Gars’ target was to deliver gross returns of 5 per cent above cash over rolling three-year periods irrespective of market conditions, by pursuing multiple strategies across the main asset classes. While initially successful in meeting its performance target between 2008 and 2015, the gross return was -9.1 per cent for 2022 and -8.4 per cent for the first six months of 2023.
Yet while Gars has become the salutary warning for investors about the weaknesses of absolute return strategies, it does not reflect the sector entirely.
Fabrizio Zumbo, Director, European asset and wealth management research at the Cerulli Associates. says some funds have bucked the broader sector decline and survived or even thrived.
"Clients are perhaps buying into the exposure to global fixed income more than they are the objective of a positive return over a given period—either way, these
funds have been winners within a declining sector."
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Gill Wadsworth, Editor
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