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Highlights:
- UBS downgraded Man Group from ‘buy’ to ‘neutral’ amid concerns over weaker performance fees and volatile fund flows.
- The AHL quant division’s net asset values have dropped by 10-20% in recent months, affecting performance fee generation.
- UBS cut its 12-month price target for Man Group by 22%, from 290p to 225p, with shares already down 11% year to date.
UBS has downgraded its rating for Man Group PLC (LSE:), the FTSE 250-listed investment management firm, from ‘buy’ to ‘neutral’. The downgrade comes as UBS raised concerns about the company’s weakening performance fee potential and growing volatility in fund flows.
One of the key areas of concern is Man Group's AHL quant division, which has experienced a significant decline in its net asset values (NAVs). According to UBS, NAVs have fallen by 10-20% in recent months, impacting the division’s ability to generate performance fees. Additionally, the company has faced increased volatility in fund flows due to the loss of several large institutional mandates, which has further added to its challenges.
As a result of these factors, UBS has lowered its earnings estimates for Man Group by 10-15% for the 2025-26 period. The bank expects that the company’s shares will likely remain range-bound over the next six to twelve months, reflecting limited growth potential in the near term.
In line with this outlook, UBS has also reduced its 12-month price target for Man Group from 290p to 225p, a 22% decrease. Man Group's shares have already dropped by 11% year to date, further reflecting the challenges the company is facing in a competitive market environment.
Man Group, a leading global hedge fund manager, now faces increasing pressure to address the volatility in its fund flows and improve its performance fee generation, particularly within its AHL quant division. Despite these headwinds, the company continues to manage significant assets, but the outlook for growth appears more constrained in the short to medium term.
