NEW YORK, Oct. 10, 2011 /PRNewswire/ -- Man, one of the world's largest listed hedge fund providers, today announced the launch of Man Long Short Fund, a new long/short equity fund of hedge funds with scheduled monthly liquidity(1) in a Registered Investment Company format. Man Investments (USA) LLC serves as the Fund's investment adviser and is part of Man's Multi-Manager Business which has approximately $12.7 billion in funds under management globally as of September 30, 2011.
Man Long Short Fund, available only to the high net worth clients of the top-tier broker dealers and advisers with an investment minimum of $50,000, provides a transparent and liquid way to access up to 30 leading long/short equity managers in a diversified portfolio. The Fund will allocate to managers in the U.S., Europe, Asia and Emerging Markets. Investors will receive scheduled monthly liquidity and 1099 tax reporting. The Board of Trustees does not currently intend to undertake a holdback on tenders(2).
Man believes the potential downside protection exhibited by long/short equity strategies is the key to their return profile and the basis through which these disciplines can offer more positive risk-adjusted returns relative to traditional long-only equity strategies.
"With a few notable exceptions such as the Fall of 1998, the spring of 2003 and the first quarter of 2009, the last 15 years have been a poor period to invest in the stock-market," said Robin Lowe, Head of Equities at Man Investments, based in New York. "It is common to see a pattern of long bull markets (e.g. 2003-07), punctuated by shorter, sharper bear markets (e.g. 2008). The fundamental justification for the long/short equity approach is not simply that tactical shifts in net exposure to equities can add value: the very existence of a 'short book' is essential to help ensure a degree of downside protection in the event of an abrupt market reversal."
Equities have been a core allocation in most investors' portfolios for many decades. The traditional arguments for maintaining an allocation to equities remain strong despite recent financial shocks and lackluster performance. Academic research generally holds that equities have more scope to generate investment returns than bonds or cash over the long-term but with much higher volatility or "risk." Man believes a critical question is whether the traditional 'long-only' approach to equity investing is the best way to access equity returns. According to Art Holly, Head of Portfolio Management for North America, "Average portfolios are still overexposed to equities; we are trying to produce a "smoother" ride by capturing 60% to 70% of the potential upside return of equities but more importantly only striving to participate in 30% to 40% of the downside. I believe it's much easier to return to equity highs from a 10% drawdown than it is a 50% drawdown where you need to make 100% return on your capital just to break even."
The Man Long Short Fund investment team has an average of 15 years of investment experience and global research coverage providing on-the-ground, local knowledge. Man's Equities' Team has received numerous awards and nominations for its long/short portfolios(3).
"Equity investing has evolved since the 1970s from mutual funds, to style box investing, ETFs, and short-extension strategies. While long/short equity is not a new strategy it has now become a widely accepted investment technique," said John Barbo, Head of US Financial Intermediary Business. "In an uncertain market environment, investors may benefit from allocating to long/short equity strategies. I believe this makes long/short equity a compelling substitute for long-only equities in a portfolio."
Man has created a dedicated fund website www.manlongshortfund.com where investors can view the fund's prospectus and learn more about long/short equity investing and the Man Long Short Fund.
Man is a world-leading alternative investment management business with assets under management of $65 billion(*). It has expertise in a wide range of liquid investment styles including managed futures, equity, credit and convertibles, emerging markets, global macro and multi-manager, combined with powerful product structuring, distribution and client service capabilities.
Man was founded in 1783. Today, Man Group plc is listed on the London Stock Exchange and is a member of the FTSE 100 Index with a market capitalization of around $7.0 billion(*).
Man Group is a member of the Dow Jones Sustainability World Index and the FTSE4Good Index. Man also supports many awards, charities and initiatives around the world, including sponsorship of the Man Booker literary prizes. Further information can be found at www.mangroupplc.com.
(*) This represents unaudited final figures both onshore and offshore products which may not be available to US investors as of September 30, 2011.
This material is distributed by Man Investments Inc. ("Man Investments"), which is registered as a broker-dealer with the U.S. Securities and Exchange Commission ("SEC") and is a member of the Financial Industry Regulatory Authority ("FINRA") and the Securities Investor Protection Corporation ("SIPC"). The registrations and memberships described in the preceding sentence in no way imply that the SEC, FINRA or SIPC have endorsed any of the referenced entities to provide any of the services discussed herein. Man Investments is a member of the Man Investments' division of Man Group plc. "Man Group" refers to the group of entities affiliated with Man Group plc.
This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of any securities related to the strategies discussed in this press release in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to any required registration or qualification in such state or jurisdiction. Investors should consider carefully information contained in an offering document before investing in any product related to the discussion in this press release. Investment value in any product will fluctuate and shares, when redeemed, may be worth more or less than their original cost.
Certain statements in this press release, such as those related to Man Group plc ("Man") and expansion of its product line constitute forward-looking statements, which involve known and unknown risks, uncertainties and other factors that may cause the actual results, levels of activity, performance or achievements of Man, or industry results, to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Among other risks and uncertainties is the ability of Man to successfully expand its product line.
The Fund's prospectus contains more complete information about the product, including its investment objective, style and risks, and its advisory fee, distribution charges and other expenses. Please read the prospectus carefully before you invest. You may access a copy of the prospectus by visiting www.manlongshortfund.com and clicking on the prospectus link or by calling (888) 335-1244. You may receive a paper copy of the prospectus at no charge by contacting your financial advisor or Man directly.
Investors should consider the following risks prior to investing in the Fund:
- Investment Types and Techniques - The Hedge Funds in which the Fund invests may invest and trade in a wide range of securities and other financial instruments and although will primarily trade in equity and debt securities, may also invest in other related instruments. The Hedge Funds are generally not limited in the markets in which they invest or in the investment discipline used. The Hedge Funds may use various investment techniques for hedging and non-hedging purposes and their use may be an integral part of a Hedge Fund's investment strategy, and may involve certain risks, including the risk that the Fund will lose all or part of its investment in the Hedge Fund.
- Use of Leverage - The Fund does not intend to use leverage for investment purposes but may do so in the future. However, the Fund may utilize leverage for portfolio management/other purposes. The terms of any borrowing may impose certain restrictions on the Fund. The Hedge Fund Managers may use leverage by purchasing instruments with the use of borrowed funds, selling securities short, trading options or futures contracts, using total return swaps or repurchase agreements and/or other means, which would increase any loss incurred. The more leverage is employed, the more likely a substantial change will occur. Some Hedge Fund Managers may use leverage to acquire extremely large positions in an effort to meet their rate of return objectives. Borrowings by the Fund are subject to limits under the 1940 Act; the Hedge Funds are not subject to such limits.
- Allocation among Hedge Fund Managers - The Advisor may change the percentage of assets allocated to each Manager, invest in additional Hedge Funds or redeem part or all of the Fund's investment from Hedge Funds. The Fund might have to place some or all of any additional capital with new Hedge Fund Managers. The Fund's success may depend, therefore, not only on the Managers currently selected and its ability to allocate among those Managers but also on its ability to identify new Managers.
- Fees and Expenses - The Fund's fees and expenses and the underlying Hedge Funds' compensation of the Hedge Fund Managers result in two levels of fees and greater expense than would be associated with direct investment in Hedge Funds.
- Lack of Liquidity of Shares - The Fund is a closed-end investment company designed primarily for long-term investors and is not intended to be a trading vehicle. The Fund does not currently intend to list the Shares for trading on any national securities exchange, there is no secondary trading market for Shares, and one is not expected to develop, shares are not readily marketable. Shares may not be tendered for repurchase on a daily basis, and currently may not be exchanged for of any other fund, shares are subject to transfer restrictions to certain persons.
- No Guarantee of Regular Repurchase Offers - Although the Fund, at the discretion of the Board, will consider whether to make periodic repurchase offers of its outstanding Shares at NAV, Shares are significantly less liquid than shares of funds that trade on a stock exchange. There is no guarantee that you will be able to sell all of your Shares that you desire in any particular repurchase offer. If a repurchase offer is oversubscribed the Fund will repurchase only a pro rata portion of the Shares tendered by each Shareholder. The Fund may not be able to complete repurchases due to the Fund's holding of illiquid investments. In the event the Fund makes repurchase offers, it is unlikely that the Fund will to be able to extend the expiration date of, or increase the amount of, any repurchase offer.
- Potential Consequences of Regular Repurchase Offers - The Fund's repurchase offer policy may have the effect of decreasing the size of the Fund over time absent significant new investments in the Fund. It may also force the Fund to sell assets it would not otherwise sell and/or to maintain an increased amount of cash or liquid investments at times. It may also reduce the investment opportunities available to the Fund and cause its expense ratio to increase. In addition, because of the limited market for certain of the Fund's private securities, the Fund may be forced to sell its more liquid securities, in order to meet cash requirements for repurchases.
- Potential Conflicts of Interest - The investment activities of the Advisor, Managers and their affiliates for their own accounts and other accounts they manage, and the activities of the Advisor, may give rise to conflicts of interest that may disadvantage the Fund.
- Valuation Risk - The valuation of the Fund's investments in Hedge Funds is ordinarily determined based upon valuations calculated by the Fund's administrator, in most cases based on information provided by the Hedge Fund Managers or third party administrators of such Hedge Funds. Thus, a Manager may face a conflict of interest in valuing the securities, as their value will affect the Manager's compensation. The Fund has established a Valuation Committee of its Board, to oversees the fair valuation of assets.
- Tax Risk - Special tax risks are associated with an investment in the Fund. The Fund has elected to qualify as a "regulated investment company" or "RIC" under Subchapter M of the code. Thus, the Fund must satisfy ongoing asset diversification, source-of-income and annual distribution requirements. If the Fund fails to the requirements, it may lose its status as a RIC, and this would have a material adverse effect on the value of Shares and amount of distributions.
- Short Sales- A Hedge Fund may use short sales of securities to limit exposure to a possible market decline, they may also use short sales for non-hedging purposes. Short selling is speculative in nature, it involves the risk of an unlimited increase in the market price of the security that can in turn result in an inability to cover the short position and a theoretically unlimited loss. Certain restrictions (now or in the future) may limits Hedge Funds to execute their investment strategies generally.
- Long-Short Equity Risk - The Hedge Funds typically manage portfolios of both long and short positions in equity securities and their success depends largely on ability to identify mispriced stocks. Long-short equity Managers rely upon market liquidity to manage their portfolio risk. Illiquidity could result in significant losses. Despite carrying both long and short positions Managers typically maintain some overall level of long or short exposure to the equity markets and are susceptible to significant price moves in equities.
Investing in a fund of Hedge Funds, such as the Fund, involves other risks, including the following:
- It is possible that the Fund could lose all or part of its investment in a Hedge Fund, which would adversely affect the Fund's performance, because Hedge Funds have a high degree of risk.
- The Hedge Funds generally are not registered under the 1940 Act. The Advisor may have little or no means of independently verifying each Hedge Fund's investment performance and strategy. Hedge Funds are typically not contractually or otherwise obligated to inform their investors, including the Fund, of details surrounding investment strategies or positions. The Advisor has no control over the Hedge Funds' investment management, brokerage, custodial arrangements or operations.
- There is a risk of misconduct by Hedge Fund Managers. The Fund does not have custody of the Hedge Funds' assets or control over their investment. A Manager could divert or abscond with the assets, inaccurately or fraudulently report the Hedge Fund's value, fail to follow agreed upon investment strategies, provide false reports of operations, or engage in other misconduct.
- By investing in the Hedge Funds through the Fund, an investor bears Fund level expenses, and also indirectly bears a portion of the expenses as an investor in the Hedge Funds.
- Each Manager generally charges its respective Hedge Fund an asset-based fee, and a performance or incentive allocations. The receipt of a performance or incentive allocation by a Manager may create an incentive for a Manager to make investments that are riskier or more speculative than those that might have been made in the absence of such an incentive.
- Investment decisions of the Hedge Funds are made by the Managers independently of each other. Consequently, at any particular time, one Hedge Fund may be purchasing interests in an issuer that at the same time are being sold by another Hedge Fund. This could cause the Fund to indirectly incur certain transaction costs without accomplishing any net investment result.
- The Hedge Funds may, at any time and without notice to the Fund, change their investment objectives, policies, or strategies. This may adversely affect the Fund's allocation among investment strategies and may adversely affect the Fund's overall risk.
- The Fund may make additional investments in, or withdrawals from, the Hedge Funds only at certain times specified in the governing documents of the Hedge Funds, thus the Fund may have to invest some of its assets temporarily in high quality fixed income securities and money market instruments or may hold cash or cash equivalents pending reinvestment.
- The Fund may choose to invest, for regulatory and other reasons, in non-voting classes of Hedge Fund shares. This would cause the Fund to have no say in matters that could adversely affect the Fund's investment in the Hedge Fund.
- Hedge Funds may be permitted to distribute securities in kind to investors, including the Fund. These securities may be illiquid or difficult to value. The Advisor may not be able to dispose of these securities at favorable prices, which would have an adverse effect on the Fund's performance, or which may adversely affect the Fund's ability to make other investments.
Prospective investors in the Fund should review carefully the discussion of risks contained within the Fund's Prospectus. An investment in the Fund should only be made by investors who understand the nature of the investment, do not require more than limited liquidity in the investment, and can bear the economic risk of the investment.
(1) Repurchases will be made at such times, in such amounts, and on such terms as may be determined by the Board, in its sole discretion. The Advisor expects that the Fund will ordinarily offer to repurchase Shares from Shareholders twelve times annually.
(2) The Board does not currently intend to hold back tender proceeds, however the Fund reserves the right to undertake a holdback upon notice and at the Board's discretion. Any descriptions or information involving investment process or strategies is provided for illustration purposes only, may not be fully indicative of any present or future investments, may be changed at the discretion of the investment manager and are not intended to reflect performance.
(3) We are providing the names of the most recent awards Man Group long/short strategies have won. This information is provided for information purposes only. These awards should not be construed as an endorsement of Man Group or its Funds. These awards are not indicative, representative or a guarantee of any investor's experience with Man nor are these awards indicative or a guarantee of future performance. The InvestHedge awards are for fund of hedge funds. Nominees and winners are selected from the InvestHedge database based on risk-adjusted performance. Funds listed in the InvestHedge database are automatically considered for the awards. This represents both onshore and offshore products which may not be available to US investors. Man is not affiliated with InvestHedge and has not paid a fee to either organization. For further information regarding the aforementioned awards, please contact Man. Past performance is not a reliable indication of future returns. This represents both onshore and offshore products which may not be available to US investors. Source: Man Investments database and InvestHedge.
SOURCE Man Group