Man Group PLC

LSE:EMG

Earnings Call Transcript 2021-Q4

[Stephen Luke Ellis]

Good

morning,

everybody.

And

hopefully,

you

can

hear

us.

Looks

like

we

have

a

reasonable

attendance,

so

we

might

as

well

crack

on,

starting

on

time.

Thank

you

for

finding

time

to

join us

today

given

everything

going

on

in

the

world

and

other

results.

Obviously,

our

thoughts

in

the

end

are

with

those

who

are

directly

and

indirectly

impacted

by

what's

going

on

in

Ukraine.

It's

easy

to

forget when

we

all

think

about

the financial

market,

there's

real-world

impacts

as

well.

For

anyone

new

to

Man,

I'm

Luke

Ellis,

the

CEO. I'm

joined

by

Antoine

Forterre,

our

CFO.

Antoine

took

over

as

CFO

from

Mark

on

October

1.

Antoine

was

previously

the

Co-CEO

of

AHL;

before

that,

the

Group

Head

of

Corporate

Development

and

the

Group

Treasurer.

So,

you

could

see

he brings

significant

appropriate

experience

to

the

role.

As

usual,

I'll

start

with

some

highlights,

an

overview

of

last

year,

and

then

Antoine

will

take

you

through

the

numbers.

After

that,

I'll

talk

about

strategy,

some

of

the

recent

growth

and

obviously

the

outlook,

and

then

we'll

open

to

questions.

Just

a

reminder;

if

you

want to

ask

a

question

today,

you'll

need

to

access

the

presentation

via

the

Webex

link

rather

than

the

dial-in

option,

and

we'll

do

that

mute/unmute

thing

which

I'll

explain

at

the

end.

So,

let's

kick

off.

2021

was

a

strong

period

of

growth

for

the

firm

with

great

results

for

our

clients

and

our

shareholders.

Strong

absolute

net

after

fee

performance

of $12.5

billion,

including

$6.6

billion

of

alpha,

and

record

net

inflows

of

$13.7

billion

led

to

a

20%

increase

in

our

assets

under

management.

Our

core

management

fee

earnings

per

share

grew

by

52%

as

we

benefited

from

ongoing

management

fee

growth

and

the

efficiency

of

our

operating

platform.

We

saw

a

near-140%

increase

in

our

total

core

earnings

per

share

as

that

positive

performance

resulted

in

significant

performance

fees.

Importantly,

the

growth

seen

in

core

EPS

this

year

reflects

real

growth

in

the

business,

not

an

easy

comparator

in

2020.

And

to

highlight

the

point,

earnings

per

share

is

up

84%

since

2019.

We

also

begin

2022

with

good

momentum

with

our

run

rate

net

management

fees

of

$939

million

and

performance

fee

potential

from

a

number

of

strategies

at

and

above

high

watermark.

As

you

know,

we

moved

to

a

progressive

dividend

policy

from

2021,

and

the

board

has

declared

a

final

dividend

of

$0.084

per

share.

This

takes

the

full

year

dividend

to

$0.14

per

share,

a

32%

increase

on

last

year.

Also,

last

December,

we

announced

our

intention

to

buy back

a

further

$250

million

worth

of

shares

which,

together

with

the

$100 million

share

buyback

we

announced

at

our

half

year

and

which

we

got

executed

in

four

months

results

in

a

total

of

$350

million

of

share

buybacks

announced

in

2021.

As

you

imagine,

we've

used

the

recent

share

price

weakness

to

accelerate

the

buyback

as

much

as

UK

rules

allow.

We're

pleased

with

the

continued

growth

and

profitability

of

our

business

and

supports

consistent

and

growing

returns

to

shareholders.

As

I've

said

before, and

I

just

want to

remind

you,

the

key

strengths

of

our

firm

is

the

combination

of

talent

and

technology

to

deliver

alpha

at

scale.

We're

a

global

leader

in

technology-empowered

investment

management

and

in

liquid

alternatives

and

solutions;

and

amongst

listed

companies,

it's

a

unique

position.

For

us,

technology

isn't

just

about

making

better

investment

decisions;

it

permeates

our

culture

and

powers

everything

we

do.

We have

invested

heavily

in

continuously

developing

our

proprietary

technology

infrastructure

to

ensure

we

remain

cutting-edge.

It

provides

a

scalable

platform

for

growth

and

creates

operating

efficiencies

throughout

the

firm.

That

technology

though

doesn't

work

in

isolation.

We

are,

at

our

core,

a

people

business.

We

hire

and

develop

first-class

talent

from

quants

and

technologists,

to

portfolio

managers

and

analysts.

We

have

fantastic

strength,

experience,

and

depth

in

our

teams,

and

we

continue

to

put

a

huge

amount

of

energy

into

our

culture

to

promote

innovation

and

collaboration

and

to

get

the

best

out

of

our

talent

working

together.

Continuing

to

invest

in

our

people

and

our

technology

is

critical

to

our

ongoing

success.

It's

the

combination

of

talent

and

technology

that

gives

us

a

real

competitive

advantage

and

a

global

leadership

position

in

liquid

alternatives,

quant,

and

solutions.

This

allows

us

to

deliver

for

our

clients,

which

drives

the

sustainable

growth

in

our

business

and

value

to

you,

our

shareholders.

As

I

mentioned

earlier,

we

had

record

growth

in

our

assets

under

management

this

year,

increasing

from

$123.6

billion

at

the

start

of

the

year

to

$148.6

billion

at

the

end

of

December.

This

increase

includes

$13.7

billion

of

net

inflows,

our

highest

since

I've

been

at

Man.

We

think

it's

probably

the

highest

ever,

but

we

couldn't

find

enough

records

going

back

to all

the

things.

I

mentioned

in

our

half one

and

the

Q3

releases

that

client

engagement

on

a

number

of

larger

mandates

had

been

positive

last

year,

and

we

saw

the

benefit

of

those

mandates

landing

in

the

second

half

of

the

year.

More

details

will come

later.

Absolute

investment

performance

was

positive

at $12.5

billion

driven

by

both

our

alternatives and

our

long-only

strategies.

Of

that

performance,

as

I mentioned,

approximately

$6.6

billion

was

alpha

and

$2.1

billion

was

relative

outperformance

which

was

a

very

good

outcome

for

our

clients

and

is

a

reflection

of

the

value

of

our

superior

active

investment

management.

2021

saw

excellent

engagement

with

existing

and

new

clients

across

the

globe

despite

the

pandemic,

reflected

by

those

record

net

inflows

for

the

year,

including

our

strongest-ever

quarters

in

Q3

and

Q4.

Net

inflows

were

driven

by

both

our

alternative

and

long

only

strategies,

was

really

across

the

board.

We

continued

particularly

to

see

high

client

demand

for

AHL

TargetRisk

and

for

our

institutional

solutions.

One

of

the

most notable

wins

for

the

year

was

a

large

mandate

into

our

Numeric

Global

sustainable

climate

strategy.

This

marked

a

very

exciting

milestone

for

us

and

is

a

strong

endorsement

of

our

ability

to

innovate

and

deliver

a

bespoke

product

designed

to

meet

the

particular

needs

of

a

client.

And

of

course,

in

this

case,

it

incorporates

proprietary

climate

research

to

meet

our

clients'

ESG

goals.

Our

$13.7

billion

of

inflows

was

notably

strong

relative

to

the

industry,

with

our

net

flows

being

9.8%

ahead

of

the

flows

in

the

sectors

where

we

operate.

It's

one

of

the

best

signs

of

the

demand

for

our

products

and

the

strength

of

our

business.

Absolute

investment

performance

across

our

product

strategies

was

10.4%.

Our

alternative

strategies

were

up

8.1%,

driven

by

positive

performance

across

the

product

suite,

with

noticeable

gains

from

AHL

Evolution,

AHL

TargetRisk

and

Alternative

Risk

Premia.

On

average,

our

long-only

strategies

were

up

13.4%,

having

benefited

from

rallying

equity

markets

and

also

the

rotation

into

value.

Performance

in

Numeric

Global,

Numeric

Europe

and

GLG

Japan

CoreAlpha

was

particularly

strong

as

a

result.

Asset

weighted

relative

outperformance

of

50 basis

points

in

alternatives

was

driven

by

our

quant

strategies,

with

AHL

TargetRisk

continuing

its

relative

outperformance

since

launch.

Relative

outperformance

of

3.8%

across

our

long-only

strategies

was

exceptionally

strong,

driven

by

their

valuation

focus.

Our

systemic

long-only

strategies

outperformed

consistently

over

the

year,

delivering

5.6%

of

alpha

relative

to

their

respective

benchmarks

on

average.

And

Japan

CoreAlpha,

as

I

mentioned,

finished

the

year

with

over

15%

of

relative

outperformance

and

has actually

done

the

same

again

in

the

first

two

months.

That's

a

great

result

for

strategies

that

have

delivered

results

for

clients

over

the

long term,

but

suffered

a

tough

couple

of

years

in

2019

and

2020.

With that, I'll hand over to Antoine.

[Antoine Forterre]

Thank

you,

Luke,

and

good

morning,

everyone.

I'm

pleased

and

fortunate

to

start

in

my

role

by

presenting

a strong

set

of

results.

I'll

first

go

through

some

highlights

before

covering

AUM,

P&L

and

balance

sheet.

Net

revenue

increased

by

57%

to

just

shy

of

$1.5

billion,

driven

by

both

management

and

performance

fees.

Net

management

fees

were

up

20%

due

to

strong

investment

performance

and

net

inflows.

At

$569

million,

performance

fees

were

materially

reaching

the

highest

level

in

over

10

years.

Thanks

to

good

performance

across

our

strategies.

Fixed

costs

of

$323

million

were

up

11%

compared

to 2020,

driven

by the

continuing

investments

in

talent

and

technology

that

we

have

guided

on

previously

as

well

as less

favorable

FX

rates.

Although

variable

compensation

increased

given

the

excellent

revenue

growth

in

the

periods,

our

compensation

ratio

of

40%

was

at

the

bottom

of

our

guided

range.

This

is

a very

good

illustration

of

the

operating

leverage

that

our

platform

and

technology

provides,

which

led

to

132%

increase

in

PBT

to

$658

million.

Finally,

we

continue

to

have

a

strong

and

liquid

balance

sheet

with

net

financial

assets

of

$907

million

as

at

the

end

of

last

year.

Over

the

periods

and

despite

most

of

our

sales

teams

still

unable

to

travel

and

meet

with

clients

in

person,

we

saw

ongoing

engagement

on

new

mandates

and

continued

strong

demand

for

diversified

product

offering.

We

had

net

inflows

of

$13.7

billion,

almost

10%

better

than

the

industry

as

Luke mentioned,

with

all

five

product

categories

recording

positive

net

flows

for

the

year.

Net

inflows

into

alternatives

of

$9.4

billion

were

driven

by

TargetRisk

and

Institutional

Solutions,

partly

offset

by

outflows

from

Alternative

Risk

Premia.

The

net

inflows

into

long-only

of

$4.3

billion

were

driven

by

the

climate-focused

win

in

Numeric

as

well

as

GLG

High

Yield

and

GLG

Asia

ex Japan.

Both

GLG

teams have

seen

good

traction

from

our

clients

and

continue

to

grow

since

their

launch

in

2019

and

2020,

respectively.

Long-only

outflows

predominantly

came

from

Continental

Europe

and

small

cap

mandates.

Finally,

as

Luke

mentioned,

we

generated

$12.5

billion

of

investment

performance,

again

with

all

five

product

categories

contributing

positively.

On

the

management fee

side,

we

saw

growth

across

both

alternatives

and

long-only

categories.

Absolute

return

contributed

the

most,

reflecting

strong

performance

and

inflows

over

the last

year.

At

$939

million,

our

run

rate

management

fees

are

up

15%

since

December

2020, giving

us

continued

positive

momentum

into

2022.

Our

run

rate

net

management

fee

margin

at

the

end

of

last

year

was

63

basis

points,

3

points

below

last

year's

average.

This

is

almost

entirely

due

to

the

large

systematic

long-only

mandate

funded

last

December

which

attracts

a

lower

margin

due

to

both

its

investment

style

and

low

active

share.

Given

the

overall

trend

in

management fee

margin

in the industry,

we

often

get

asked

about

our

views.

So,

I

thought

I

would

preempt

the

question.

Our

focus

is

on

generating

profitable

revenue

growth

in

the

various

product

categories

that we run,

taking

into

account

their

positioning,

performance

and

capacity.

What

this

means in

practice

is

that

net

management

fee

margin

is very

much

an output

of

the

underlying

mix

of

assets

we

manage

for

clients,

not

something

we

target

specifically.

The

impact

of

the

large

systematic

long-only

mandate

we

funded

last

year

was,

therefore,

a

one-off and

you

can

expect

the

previous

trends

on

management

fee

margin

to

resume

going

forward.

Moving

on

to

performance

fees

where

I'm

delighted

to

report,

we

had

our

strongest

year

in

over

a

decade.

We

often

talk

about

the

value

of

the

performance

fees

we

generate

and

last

year

was

a

perfect

illustration

of

that

point.

Overall

performance

fees,

including

gains

on

investments,

were

$596

million.

These

were

driven

by

$154

million

from

AHL

Evolution

and

$224

million

from

other

alternative

strategies,

most

notably

from

institutional

solution

mandates.

Institutional

Solutions

are

customized

mandates

which

combine our

investment

capabilities

to

meet

client-specific

needs.

They're

all

different,

but

collectively

have

grown

in

size

and

numbers

over

time.

And

last

year,

they

generated

$150

million

of

our

performance

fees.

Although most

of

our

performance

fees

were

earned

indeed

from

alternative

strategies,

our

long-only

strategies

also

contributed.

And

finally,

we

made

gains

on

investments

of

$27

million

which

predominantly

relates

to

the

performance

of

our

seed

book.

Some

longer-term

perspective,

better

to

appreciate

the

value

and

potential

of

this

earnings

stream

over

time,

since

December 2016,

as

you

can

see

on

the

slide,

our

performance

fee-eligible

AUM have

grown

by

66%.

And

the

stock of

AUM

just

at

high

watermark

today,

at

$34

billion,

is

broadly

similar

to

the

overall

stock

of

performance

fee-eligible

AUM

we

had

back

then.

Finally,

at

the

end

of

the

year,

we

had

accrued

in our

funds

for the

$135

million

in

performance

fees

due

to

crystallize

over

the

course

of

2022.

This

number

will

vary

based

on

the

performance

of

the

underlying

funds

but

as

of

today,

our

strategies

have

navigated

at

the

beginning of

this

year

fairly

well.

We

now

turn

to

costs.

We

came

in below

our

fixed

cash

cost

targets

in

2021,

partly

through

the

prolonged

impact

of

COVID

and

partly

through

cost

discipline.

Fixed

compensation

costs

increased

by

7%

to

$208

million,

reflecting

the

strengthening

of

sterling

versus

dollar

and

the

continuing

investments

in

our

teams.

Other

cash

costs

increased

by

19%

to

$115

million,

driven

by

several

factors,

an

increase

in

work-related

costs,

higher

occupancy

costs

following

the

exit

of

the

main

subtenant

of

our

London

office,

increased

charitable

donations

and,

again,

adverse

effects

moves.

We

expect

our

fixed

cash

costs

for

2022

to

increase

to

$355

million

with

three

main

drivers;

first,

continuing

investments

in

selected

growth

areas

such

as

trade

execution

and

ESG

and

Luke

will

talk

about

this

bit

more

later

which

accounts

for

approximately

40%

of

the

increase;

second,

ensuring

we

remain

competitive

for

tenants

which

also

accounts

for

40%

of

increase;

and

then

third,

the

normalization

of

pandemic

affected

costs

with

travel,

accounting

for

the

remaining

20%.

As

we've

indicated

previously,

we

are

keen

to

capitalize

on

the

growth

we've

seen

and

invest

further

in

the

business,

so

we will

keep

applying

the

same

discipline

that

has

guided

us

over

the

last

few

years.

Variable

composition

costs

increased

due

to

higher

margins,

in

particular

performance

fee

revenues.

That

strong

revenue

growth

meant

our

compensation

ratio

declined

to

40%

compared

to

48%

a

year

ago;

40%

is

the

bottom

of

our

guidance

range

reflecting

an

excellent

periodic

performance

fees.

The

result

of

all

this

is

a

PBT

margin

increasing

to

44%

compared

to

30%

a

year

ago,

highlighting

the

positive

operating

leverage

in

our

business

in

areas

of

strong

revenue

growth.

In

summary,

strong

investment

performance

and

record

net

inflows

increased

our

AUM

to

a

new

high

of

$148.6

billion

leading

to

a

57%

increase

in

net

revenue.

Together

with

our

cost

discipline,

which

marries

prudence

with

investments

in

selected

growth

areas,

this

resulted

in

core

EPS

growing

by

139%

to

reach

a

new

high

of

$0.387

a

share

in

2021,

thanks

in

particular to

strong

performance

fee

earnings.

A

few comments

on

our

balance

sheets

which

remains

robust

and

liquid.

We

had

$907

million

of

net

financial

assets

at

the

end

of

December

before

payments

of the

final

dividend

and

completion

of

our

share

buyback

program.

Our

seed

investments

of

$648

million

have

increased

from

$485

million

at

the

end

of

2020 due

to

targeted

deployment

of

capital

to

invest

in

new

strategies.

Since

2019,

we

have

made

selective

use

of

external

financing

arrangements,

such

as

repos,

as

we

increase

the seed

investments

and

support

new

initiatives,

we'll

consider

the

most

efficient

financing

available,

including

drawing

on

a

credit

facility

for

operational

purposes.

Our

balance sheet

strength

allows us

to

invest

in

the

business

to

support

our

long-term

growth

prospects,

evaluate

the

many

opportunities

and

ultimately

maximize

shareholder

value.

As

we

have

done

in

the

past

however,

we

intend

to

return

to

shareholders

capital

that

we

consider

to

be

in

excess

of

near-term

requirements.

Finally,

while

our

cash

flows

may

vary

year-by-year

over

time

that

support

strong

consistent

and

growing

returns

to

shareholders.

Since

2016, we have

returned

$2

billion

through

dividends

and

buybacks,

and

our

share

accounts

is

reduced

by

17%,

which

means that

for

every

dollar

of

earnings

we

generate,

individual

shareholders

get

$0.20

more

now

than

five

years

ago.

Our

total

proposed

dividend

of

$0.14

per

share

represents

an

increase

of

32%

from

2020,

reflecting

the

growth

in

the

business

and

implementation

of

our

new

progressive

dividend

policy.

Going

forward,

we

expect

our

dividend

to

grow

progressively

across

cycles

with

interim

dividend

being

around

a

30% to

40%

of

our

total

for

the

year

in

line with

the

broader

markets.

Given

the

adjustments

to

the

interim

versus

final

split

required

from

our old

policy,

the

board

is

minded

to

maintain

the

interim

dividend

constants

until

such

time

as

a

new

sprint

is

achieved.

After

completing

the $100

million

of

share

buyback

announced

back

in

September

20,

we

announced

a

further

$350

million

in

share

buybacks

over

the

course

of

2021

of

which

$188

million

have

been

completed

as

of

last

Friday.

Together,

with

an

estimated

$194

million

of

dividend

payments

in

relation

to

2021,

this

brings

the

total

announced

returns

to

shareholders

for

2021

alone

to

over

$0.5

billion

or

roughly

$0.40

per

share.

To

conclude,

the

strong

results

reward

the

efforts

of

our

people

over

the

last

few

years,

demonstrate

the

growth

potential

for

firm

and

give

us

confidence

in

our

strategy.

And

on

that

point,

let

me

hand

over

to Luke.

[Stephen Luke Ellis]

Thank

you, Antoine.

Well,

when

we

look

at

our

talent

and

technology,

we

have

a

huge

competitive

advantage.

We

hire

and

develop

world-class

talent

across

the

firm

from

clients and

portfolio

managers

to

technologists

and

analysts; and

we

foster

this

culture

of

innovation

and

collaboration.

Our

technology

isn't

just

about

making

better

investment

decisions,

it

powers

everything

we

do

at

Man.

We're

a

global

leader

in

quantitative

investing

and

we

also

use

that

technology

to

support

discretionary

investment

teams

technology to

support discretionary

investment teams

to

improve our

client

service

and

to

constantly

automate

parts

of

our

platform.

In

this,

we

feel

we're

orders

of

magnitude

ahead

of

most

asset

managers

and

the

investments

we've

made

and

the

culture

we've

built

gives

us

a

huge

and

persistent

competitive

advantage.

Our

technology

delivers

real

benefits

to

clients

and the

firm.

We

can

deliver

bespoke

strategies

to

our

clients

only

because

our

tech

platform

allows

us

to

operate

efficiently

and

effectively

in

hundreds

of

markets

across

the

globe.

That

platform

supports

the

alpha

we've

generated

for

clients

this

year

that

then

accrues

in

revenues

and

profits

for

the

firm

with

our

quant

strategies

alone

generating

over

$1

billion

of

revenues

for

the

firm

this

year.

I'm

convinced

that

our

business

model

gives

us

the

ability

to

deliver

consistent

growth

for

the

business

over

time.

Large

institutional

investors

have

an

insatiable

appetite

for

output

to

enable

them

to

reach

their

target

returns.

Our

business

is

designed

to

deliver

them

that

alpha

at

scale.

The

breadth

and

quality

of

what

we

do

and

the

range

of

different

and

distinct

approaches

to

investing

at

Man

Group

is

compelling

for

our

clients.

We're

an

alpha-focused

asset

manager

and

we

aim

to

have

as

many

different

sources

of

alpha

available

to

clients

as

we

can

create.

We

grow

by

adding

new

sources

of

alpha

through

organic

innovation,

recruitment

and

acquisition.

We

grow

by

enhancing

our

existing

alphas

and

by

increasing

capacities

in

those

alphas

by

improved

trade

execution.

There

is

always

excess

client

demand

from

large

institutions

for

those

alphas

as

long

as

the

quality

of

alpha

is

maintained.

Liquid

alternatives

continue

to

be

a

significant

part

of

the

solution

to

navigate

the

current

macroeconomic

environment

of

rising

rates.

There

is

a

very

large

demand at

the

moment

for

bond-like

returns.

Well,

okay,

what

people

imagine

bond-like

returns

look

like,

it's

a

4%

to

5%

returns

annually

with

[indiscernible]



(00:21:51).

In

reality,

that's

not

what

bonds

have

done in

the last

12

months

nor

is

it

how

bonds

will

likely

perform

in

the

next

few

years.

Alternative

managers

with

excellent

risk

management

skills

who

could

deliver

fixed

income

replacement

strategies

with

these

desired

bond-like

returns

will

continue

to

grow

and

that's an

area

where

we're

very

well-placed and

we

continue

to

invest.

As

opportunities

in

new

markets

emerge,

we're

well-positioned

considering

our

long

track

record

of

investing

successfully

in

new

asset

classes,

non-traditional

markets

and

frontier

markets.

We

know

how

to

move

quickly

to

collect

data,

analyze

the

opportunity

and

also

develop

the

access

and

legal

structures

to

enable

us

to

be

early

movers

with

commensurate

extra

returns

for

clients

and

shareholders

alike.

Our

research

teams

are

continually

exploring

new

markets

and

every

year,

we

push

the

boundaries

of

opportunity.

There

are

few

firms

with

a

range

of

solutions

we

offer

and

on

a

proven

track

record

of

delivering

investment

performance

with that

alpha

at

scale.

It

allows

us

to

appeal

to

a

wide

range

of

clients

from

around

the

world

and

to

always

remain

relevant

to

the

client's

CIO

through

market

cycle.

And

takes

me

nicely

onto

the

next

slide.

Inflation

has

hit

record

highs

in

economies

around

the

world

with

central

banks

expected

to

begin

or

have already

begun

tightening

monetary

policy.

Maybe

they're

all

behind

the

curve

anyway.

While

there's

a

question

of

how

far

rates

will

have

to

rise

and

by

how

much,

and

whether

central

banks

have

the

stomach

to

push

them

far

enough

to

squeeze

inflation

down

to

their

2%

target.

So

we

don't really

know

how

long

this

period

will

last. It's

clear investors

face

the challenge

of

how

to

position

their

portfolios

during

an

inflationary

period

for

at

least

the

next

year

or

two.

In

early

2021,

we

published

an

award

winning

paper

entitled

The

Best

Strategies

for

Inflationary

Times,

a

great

example

of

the

academic

rigor

we

bring

at

Man,

because

it

was

an

academic

award,

not

a

publicity

one,

and

how

we

look

collaboratively

to

understand

complex

topics

to

add

value

to

our

clients.

The

paper

sought

to

answer

a

simple

question

what

investments

have

tended

to

do

well

or

less

well

in

environments

of

high

and

rising

inflation?

Our

analysis

span

nearly

a

century.

The

long

sample

particularly

important,

because

inflation

surges

in

developed

countries

have

been

rare

in

the

past

30

years.

Luckily,

but

not

surprisingly,

some

of

our

findings

were

particularly

relevant

to

our

own

business.

First,

the

trend-following

strategies

have

done

particularly

well

in inflation

episodes.

This

is

primarily

due

to

their

dynamic

characteristics

that

don't

depend

on

a

positive

beta

in

a

single

asset

class.

They're

as

happy

to

be

short

bonds

as

long

bonds.

Second,

that

a

number

of

active

equity

factor

strategies

provide

some

degree

of

risk

mitigation

during

inflation

surges.

While

our

analysis

reaffirms

some

of

what

we

already

knew,

it

importantly

highlights

why

Man

Group,

with

our

35

years

of

experience

investing

in

these

markets,

is

well-positioned

to

help

clients

achieve

their

aims

in

the

current

environment.

As

I've said

before,

we're

a

client-focused

firm.

By

that,

I

don't

mean

a

distribution-focused

firm.

Since

I

became

CEO,

we've

made

it

a

big

priority

for

the

firm

to

adopt

an

outward-looking

mindset,

to

listen

and

respond

to

clients.

We

understand

their

unique

needs

and

can

create

solutions

tailored

to

meet

their

individual

requirements.

Giving

clients

solutions

to

meet

their

needs

rather

than

a

standard

product

that's

easy

to

produce

for

the

manager

is

really

differentiating

in

asset

management

and

it

creates

greater

flows

and

stickier

assets

than

a

product

sale.

Man

has

the

creativity

structuring

and

very

flexible

platform

to

be

able

to

deliver

bespoke

solutions

to

clients'

needs

effectively

and

efficiently.

In

Q3,

the

very

strong

flows

came

primarily

from

eight

different

multi-$100

million

separate

account

solutions

for

clients

from

the

West

Coast

to

the

US,

all

the way

through

to

Australia,

investing

across

GLG,

AHL

and

FRM,

each

one

adapting

our

solution

to

meet

the

needs

of

the

client.

In

Q4,

a

tangible

example

of

our

solution

delivery

was

the

large

win

into

our

Numeric

Global

Sustainable

Climate

strategy,

partnering

with

SJP,

I

mentioned

earlier.

It

was

a

strong

endorsement

of

our

ability

to

deliver

a

bespoke

product

that

met

the

clients'

needs

for

a

clear

process

with

significant

scalability,

that

chosen

the

level

of

tracking

risk

and

hence

fees

and

crucially

incorporating

our

proprietary

climate

research

to

target

low-carbon

usage

and

at

worst

a

1.5

degree

warming

world.

More

broadly,

our

leadership

in

quantitative

investing

and

technology

allows

us

to

deliver

intelligent

responsible

investing

by

interrogating

complex

ESG

data

effectively.

We've

made

significant

progress

in

recent

years,

now

integrating

ESG

within

$55

billion

of

our

assets

under

management.

I

would

just

remind

you,

it's

not

sensible

to

talk

about

integrating

ESG

within

all

of

our

assets

as

things

such

as

US

Treasuries

or

dollar-yen

effects

don't

realistically

fit

into

an

ESG

integration

framework.

The

figures on

this

slide

demonstrate

the

strength

of

the

client

franchise

we've

built

with

the

world's

largest

and

most

sophisticated

investors

and

the

real

progress

we

delivered

against

some

of

our

key

strategic

priorities

over

a

five-year

period.

We

think

you

could

see

the

value

of

our

approach

and

how

clients

interact

with

us.

When

clients

invest

in

one

product

with

us,

they

often

make

a

second,

third

or

fourth

investment

too.

Our

top

50

clients

invest

on

average

in

four

of

our

strategies

and we've

now

seen

cumulative

inflows

of

over

$38

billion

since

2017.

So,

that's

in

just

five

years.

More

than

25

clients

now

invest

over

$1

billion

with

us.

Over

$65

billion

of

our

AUM

is

from

clients

invested

in

five

or

more

products

and

over

$40

billion

of

our

AUM

is

from

clients

domiciled

in

the

Americas.

What

we've

seen

in

recent

years

is

the

result

coming

through

of

a

lot

of

the

hard

work

we've

put

in.

We

continue

to

be

focused

on

increasing

the

diversification

of

our

business

for

the

future.

We're

a

market

leader

in

trade

execution

and

we

continue

to

build

our

firm-wide

Center

of

Execution

Excellence.

In

2020,

we

traded

40%

more

volume,

but

we

reduced

our

overall

dollars

of

slippage

by

nearly

10%.

This

is

real

value

creation

for

clients

and

shareholders

alike.

Execution

efficiency

enables

us

to

capture

more

alpha

for

clients,

create

more

capacity

in

our

flagship

strategies

and

this

is

a

fast

evolving

area

right

for

further

innovation.

The

development

of

systemic

-systematic

ways

to

trade

single-name

credit

as

fixed

income

markets

are

increasingly electronic

is

an

example

of

an

exciting

opportunity

for

us.

I'm

sure

all

asset

management CEOs

are

saying

we're

investing

into

our

ESG

capabilities

further. Of

course,

we

are,

growing

our

team

and

launching

a

range

of

strategies

across

the

business,

both

in

liquid

and

private

markets.

For

us,

this

is

combining

our

ability

to

manage

messy

data

with

real

scientific

insight

and

human

engagement

to

produce

intelligent,

responsible

investing. And

as

we've

talked

about,

we

have

a

technology

lead,

and

we

invested

over

$100

million

into

our

technology

capabilities

in

2021,

which

will

further

support

our

ability

to

serve

our

clients

going

forward.

When

you

have

an

edge,

this

is

the

time

to

press

your

advantage

and

grow

your

edge.

It's

about

deepening

our

moat.

We're

pleased

with

the

diversified

range

of

products

we

can

offer

clients

today.

However,

I'm

also

convinced

that

the

minute

you

stop

innovating,

you

start

to

decline.

We've

been

steadily

growing

our

range

of

products

in

recent

years.

We

see

that

new

strategies

and

we've

seen

inflows

into

a

number

of

these

in

discretionary

and

fixed

income,

for

example.

We

remain

focused

on

expanding

our

range

of

alternative

and

solutions

offering

and

consider

our

current

pipeline

of

new

ideas

and

products

very

strong.

This

creates

multiple

dimensions

for

future

growth.

2021

was

an

excellent

period

of

growth

and

demonstrates

the

potential

for

firm

we've

built

over

the

past

few

years.

We

delivered

20%

growth

in

management

fees

and

52%

growth

in

core

management

fee

EPS

versus

2020.

We

had

a

strong

performance

fee

outcome

due

to

the

much

larger

performance

fee

eligible

AUM

we run

these days

and

we continue

to

grow

our

performance

fee

potential

with

eligible

AUM

up

23%

in

the

year

alone.

I

would

love

to

say

it

was

a

blowout

performance

here,

but

honestly,

it

was

good,

not

great.

And

with

our

higher

AUM,

we

could

achieve

truly

great

things

that everything

comes

together.

What

we've

achieved

in

2021

reflects

our

performance,

the

demand

for

our

products

and

the

value

of

our

technology

empowered

active

investment

management.

These

results

were

a

reflection

of

real

growth,

not

a

simple

comparator,

as

we

delivered

a

very

resilient

set

of

results

during

what

was

a

very

challenging

year

for

most

in

2020.

However,

it's

not

just

a

one

year

phenomenon.

We've

consistently

delivered

growth

in

our

core

business

over

the

past

five

years,

management

fees

have

grown

36%

but,

importantly,

our

core

management

fee

profit

before

tax

has

more

than

doubled

and our

management

fee

EPS

grew

by

134%,

reflecting

the

impact

of

our

ongoing

share

buybacks.

They

generate

real

value.

This

highlights

a

client's

confidence

in

our

ability

to

manage

and

grow

their

assets

and

our

focus

on

running

the

business

efficiently

and

translating

performance

and

inflows

into

profitable

growth

for

our

shareholders.

Performance

fees,

we

think

this

are

a

very

valuable

earnings

stream

for

shareholders.

We've

increased,

as Antoine

mentioned,

our

performance

fee

eligible

AUM

by

66%

since

2016,

which

means

the

same

percentage

return

creates

meaningfully

more

performance

fees.

If it's

not

entirely

obvious,

future

performance

fee

potential

grows

proportionally

with

the

performance

fee

eligible

AUM.

This

year,

we've

really

seen

the

benefits

of

the

diversified

range

of

performance

fee

earning

strategies

we

offer.

I

just

think

it's

worth

pausing

to

reiterate

some

of

those

numbers.

In

2021,

we've

delivered

greater

than

50%

growth

in

management

fee

profits

and

an

even

higher

growth

including

performance

fees.

We've

announced

a

return

of

over

15%

of

our

market

cap

through

dividends

and

buybacks.

Those

aren't

numbers

you

might

associate

with

an

asset

management

firm,

but

it

comes

because

we're

a

global

leader

in

applying

technology

to

financial

markets.

We've

grown

strongly

over

the

past

five

years

and

we're

confident

that

we

can

continue

to

do

so

in

the

future.

It's

been

an

excellent

year

for

Man

Group

and

a

very

strong

outcome

for

clients

and

shareholders

alike.

But

really,

it's

been

an

excellent

two

years

for

Man

Group

because

the

outstanding

work

the

team

did

to

look

after

our

clients

and

our

colleagues

and

their

assets

during

2020,

despite

the

pandemic

created

the

platform

for

us

to

take

advantage

of

the

opportunities

that

2021

gave

us.

We've

always

been

confident

the

firm

will

deliver

in

periods

such

as

this;

it

did;

and

our

focus

is

on

delivering

more

in

the

future.

We're

in

excellent

shape

with

a

solid

competitive

advantage

and

good

momentum

going

into

2022.

I

wouldn't

normally

talk

about

the

short-term,

but

you're

going to

ask

and

there's

obviously

been

a

lot

going

on

in

markets

in

the

last 10

days

and

frankly,

all

year.

I'm

pleased

to

say that

our

processes

are

doing

exactly

what

they're

supposed

to

do

and

while

with

volatile

markets

things

can

change

very

quickly,

our

CTA

strategies

are

making

money

year-to-date

and

our

quants

are

behaving

rationally.

So

with

that,

we'll

open

up

for

questions.

[Stephen Luke Ellis]

As

a

reminder

to

ask

a

question

you

need

to

have

joined

via

the

Webex

link.

So,

if

you

haven't,

you

need

to

switch

over

quickly

but

we

have

100 people

on there, so

hopefully you

have.

On

your

screen

and

it

might

vary

a

little

bit

by

device.

You

have to

press

the

raise

hand

button

to

notify

us

that

you

want

to

ask

a

question,

then

I

will

give

you

the

option

to

unmute,

you

then

unmute

yourself

and

ask

your

question.

It's

what

we

did

last

time. Hopefully,

it'll

work.

And

rather brilliantly

Arnaud

got

on

there

about

half

an

hour

ago.

So,

Arnaud,

you're

going

to

go

first, so

you

should

get

a

thing

saying

request

unmute

and you've

unmuted

and

you

can

talk

away.

[Arnaud Giblat, Analyst, Exane BNP Paribas]

Yeah,

good

morning.

Hopefully,

you

can

hear

me.

[Stephen Luke Ellis]

Yes.

[Antoine Forterre]

Yes.

[Arnaud Giblat, Analyst, Exane BNP Paribas]

Great.

Thank

you.

I've

got

three

questions,

please.

First,

could

you

talk

about

the

M&A

environment?

Obviously,

we've

seen

a

significant

de-rating

amongst

the asset

managers

in

the

private

market

space.

Purchase

multiples

have

come

down

for

stakes

being

purchased.

I'm

just

wondering

how

you're

seeing

pricing

evolve

and

especially

the

way

maybe

I

think

of

it

thinking

back

in

time

is

generally

when

public

markets

come

off,

then

the

bid

ask

spread,

if

you

will,

between

buyers

and

sellers

tends

to

widen

and

that

kind

of

makes

it

difficult

to

execute

on

transactions.

So,

I'm

just

wondering

how

we

should

think

about

the

M&A

opportunity

going

forward

here

considering

markets.

My

second

question

is

regarding

tax.

I

think

in

the

appendix

you

gave

some

guidance

on

taxes.

So,

could

you

come

back

and

revisit

the

tax

guidance

and

what

are

the

key

inputs

there

that

that'd

be

helpful.

And

thirdly,

on the St.

James's

Place,

does

that

account

for

the

vast

majority

of

the

run

rate

management

fee

dropped

from

66

basis points to 63

basis points? I'm

just

trying

to

think

about

how

we

should

think

about

that

margin

going

forward.

Thanks.

[Stephen Luke Ellis]

So,

thank

you

for

that.

The

short

version

on

the

last

question

is

yes,

but

Antoine

may

have

longer

answers

in

a

minute.

Let

me

talk

about

the

M&A

situation.

You

know,

obviously,

the

change

in

tone

in

markets

is

fairly

recent

and

it'll

be

interesting

to

see

whether

it

does

bring

down

people's

expectations

more

in

line

with

where

we

are.

We

continue

to

look

at

things.

We

continue

to

be

extremely

disciplined.

We

don't

think

it's

a

good

idea

to

chase

prices.

We

hope

prices

will

have

come

down

commensurate

with

what's

going

on.

I

think

one

of

the

interesting

things,

in

December,

I

talked

with

a

couple

of

investment

banks

and

they

were

telling

me

how

many

IPOs

they

had

planned

for

private

markets

businesses

in

January,

as

you've

seen

very

little

got

done in

January

and

the

performance

of

some

that

have

been

done

is

not

particularly exciting.

That

presumably

takes

the

IPO

market

off-the-table

and it

might

create

opportunity.

But

we

continue

to

look

at

alternative

managers.

We

continue

to

look

at

long-only

managers.

We

continue

to

look

at

private

markets

managers.

We

will

keep

looking

at

things

until

we

find

something

which

is

compelling

for

clients

and

shareholders

alike.

And

if

we

don't

find

something,

we'll

keep

buying

back

the

shares.

[Antoine Forterre]

Tax,

you

likely to

spot

the

guidance

that

we

give

at

the

end

of

the

presentation.

The

main

driver

for

zero tax

rate

is

the

location

of

profits

across

the

group

rates

several

jurisdictions

as you'd

imagine.

UK

is

one

of

the

key

jurisdiction

in

which

we

operate.

And

the

UK

corporate

tax

rate

is

due

to

increase

to

23%

from

19%,

if

I'm

not

mistaken,

over

the

last

year

and

a

half

of

– forward

year

and

a

half,

that

accounts

for

the

increase

in

guidance

to

2023.

The

second

driver

is

the

stock

have

accumulated

tax

losses

that

we

have

in

the

US,

which

has

been

enabling

us

to

an effect

pay a

very

little,

if

any,

federal

taxes

in

the

US.

As

we

grew

in

the

US

and

generating

more

profits,

those

tax

loss

will

be

consumed

and

we'll

start

paying

taxes

in

the

US

and

that's

what

you

see

guided

on

sort

of

2024

and

forward.

And

then,

on

St. James's

Place, Luke

sort of said that,

yes,

the

vast

majority

of

it

is

St. James's

Place,

which

accounts

for

the

drop.

The

guidance

that

we

gave,

as

you

can

expect

the

trend

that

you've

seen

over

the

last

year,

1.5

year

before

to

resume

going

forward.

[Stephen Luke Ellis]

Cool.

Hubert,

you

are

next.

So, there you go.

Well,

then,

you've

unmuted

yourself.

And

off

you

go.

[Hubert Lam, Analyst, BofA Securities]

Right. Thank

you

very

much

for

taking

my

questions.

I've

got

three

questions.

Firstly,

can

you

talk

about

the

full flow

pipeline

into

this

year?

Obviously, you

had

a

great

second

half

of

last

year

and

you

– Luke,

you

talked

about

how

well

placed

your

products

are

for

this

environment.

So,

maybe

you can talk

about

how

[ph]



the current (00:40:31)

momentum

is

like

and

also

about

what

products

are

you

seeing

strong

interest

in.

First

question.

Second question is

on

dividend.

Now

that

you've

re-based

your

dividend, I

assume

the

$0.14

is

the

floor

now.

But

how

do

we

think

about

the

dividend

growth

going

forward?

How

should

we

– should

it be

based

on

[ph]



not

(00:40:50) fee

growth

or –

this

is

a new

territory

for

us, so

I'm

just

wondering

how

we

should

think

about

dividend

growth.

And

lastly,

can you

also

– I

think you

– I

may have missed it,

but can

you

say

how

much

assets

with

performance

fees

is

currently at

the

high

watermark?

And

also,

the

number

you're

going to

give

me,

is

that

as

of

today

or

at

the

end

of

last

year, in case that's

changed.

Thank

you.

[Stephen Luke Ellis]

That.

You

know

we

don't

like

to talk

about

current

year

flows.

I

think

the

way to

think

about

it

was

the

third

and

fourth

quarters

were

truly

exceptional,

but

we've

shown

consistent

inflows.

We

came

into

the

year

with

a

forward-looking

pipeline

that

looked

consistent

with

our

achievements

in

the

past.

Exactly

what

happens

will

depend

on

what

our

friend

in

Russia

does

and

quite

how

bad

that

situation

gets.

But

as

I

say,

so

far,

clients

are

acting

extremely

rationally

and

sort

of

the

business

is

progressing

as

normal.

As

you

can

imagine

in

this

sort

of

environment,

people

are

interested

in

the

alternatives,

but

–

or

maybe

the

better

way

of

putting

it

is

they're

very,

very

nervous

about

equities.

But

I

think

we're

right

in

the

teeth

of

the

storm

at

the

moment,

so

let's

see

how

it

develops

over

time.

[Antoine Forterre]

Shall I do

the

next

two?

[Stephen Luke Ellis]

Sure.

[Antoine Forterre]

Dividend

policy

is

now

progressive

as

you

highlight,

which

means that

the

intention is

to

grow

dividends

progressively

over

the

cycle.

Last

year

was

a

particularly

strong

year

of

growth

for

core

earnings so,

not

surprisingly,

we

grew

dividend

slightly

less

than

core

earnings.

Although, it's

worth

flagging

that

if

you

add

the

share

buyback

that

we

announced

in

relation

to

2021

overall

returns

to

shareholders,

are

marginally

higher

than

core

earnings

for

last

year.

Going

forward,

you

can

expect

kind

of

similar

level

of

returns

that

we've

done

in

the

past,

but

with

a

sort

of

similar

profile

over

the

cycle.

You

have to

think

that as a

growth

prospect

for

our business.

On

the

one

hand,

that'll

guide

you

on

how

to

grow

that.

And

then,

last

point

on

share

buyback,

asking

the

attractiveness

of

share

buyback,

at

times,

when

we

believe

our

share

price is

not

representing

fair

value

remains

something

that

we

keep

in

mind.

AUM

at

high

watermark

is

$34

billion

as

of

the

end

of

last

year

and

the

number is

at

the

end

of

December.

As

Luke

mentioned,

our

strategies

have

performed

fairly

well.

And

overall,

some

of

the

key

drivers

of

performance

fee

are

at

levels

and

you'll

see that

[indiscernible]



(00:43:46)

screens, it's

very

similar

to

where they

were at the

end

of

last

year.

[Stephen Luke Ellis]

So,

no

meaningful

change.

Great. Thank

you.

[Stephen Luke Ellis]

Thank

you.

Now,

at

the

moment,

we

have

no

other

questions.

So,

a

reminder

to

people

–

there

we go. Thank

you,

Bruce.

[Operator Instructions]



Bruce,

I've

sent you

the unmute.

There

you

go.

You

are

with

us.

You got

us.

There

we

go.

[Bruce Hamilton, Analyst, Morgan Stanley & Co. International Plc]

Perfect.

Okay.

Cool.

So,

just

to –

so,

going

back

to see

some

of

the

recent

answers,

on

the

fee

margin

point,

so

should

we –

looking

at

your

pipeline,

would

you

assume

that

it's

more

kind

of

65-ish

bps

and

therefore

we

get

a

slight

sort of

improvement

over

time

after

the

step-down

because

of Q4?

Or are

you

saying

63

bps

is

kind

of a

good-ish

number

to

use?

And

then,

linked

to

that,

in

terms

of

the

growth

fund

pipeline,

is

it

very

heavily

skewed

to

TargetRisk

or

is

it

pretty

well

diversified?

I

guess

you've

probably

got, I

assume,

reasonable

visibility

on

the

growth

pipeline,

the

redemptions

is

the

bit

you

have

less

visibility

on.

Is

that

the

way

to

think

about

it? And

how

diversified

is

that

pipeline?

[Stephen Luke Ellis]

So,

on

the

pipeline,

yes, that's

sort

of

always

right

that

we

have

a

projection out

12

months

on

our

inflow

pipeline

with

some

sort

of

weightings

on

it

and

it

generally

proves

to

be

extremely

accurate

for

what

we

expect.

The

outflows

is

always

market-dependent

in

some

form

or

another

or

what's

going

on

with

the

client. So,

the

flows

are

really

quite

well-spread

across

or

the

potential

inflows

are

quite

well-spread

across

most

of

the

things

we

do.

So,

it's

not

heavily

dependent

on

any

one

piece

of

the

puzzle

at

all.

If

anything,

the

thing

that

is

most

dominant

is

solutions,

which

is

really

where

we

are

building

something

bespoke

for

the

client.

And

so,

we

have

to

then

back

it

out

into

the

categories.

But

clients

are

looking

for

us

to

give

them

answers

to

their

problem.

[Antoine Forterre]

And

Luke

partly

answered,

I

guess, the

first

question.

Given

the

flows

that

we

see

and

the

distribution

of

the

flows

across

the

product

categories,

our

guidance

is

that

we

expect

the

trends

you've

seen

in

margin

before

the

one-off

impact

of

that

large

mandate

to

resume.

[Stephen Luke Ellis]

So,

it's

all

there

or

thereabouts.

[Antoine Forterre]

Yeah. It's

actually

what

I'll

comment

on. So, 1

or 2

basis

points.

[Stephen Luke Ellis]

Yeah,

exactly.

To

try

to

work

out

the

asset-weighted

thing

to

a

nearest

basis

point

on

future

flows

minus

future

redemptions

is

an

impossible

calculation,

I

would

say.

The

flow

from

St.

James's

Place

is

a

fantastic

piece

of

business

for

the

firm.

I'm

sure

it'll

be

a

fantastic

thing

for

their

clients.

It

operates

at

a

different

level

of

risk

than

Numeric normally

runs

at

and

so

commensurately

runs

with

a

different

level

of

fees.

But it's

obviously

at

a

different

level

of

scale.

So,

as

a

return

for

shareholders,

it's

a

very

good

piece

of

business

as

well

as

being

good

for

the

client.

[Bruce Hamilton, Analyst, Morgan Stanley & Co. International Plc]

Got

it.

Helpful.

Thank

you.

[Stephen Luke Ellis]

Thank

you,

Bruce.

[Antoine Forterre]

Thank

you,

Bruce.

[Stephen Luke Ellis]

We

are

short

of

questions

unless

anybody

else

has got

one.

I

guess

this is what happens

when

you

have

a

good

set

of

results.

[Operator Instructions]



There

we

go.

Arnaud

is

back.

[Antoine Forterre]

Arnaud

is

back.

[Stephen Luke Ellis]

Hi,

Arnaud.

You

should

be

unmuted

and

off

you

go.

[Arnaud Giblat, Analyst, Exane BNP Paribas]

Great.

Thought

I'd

take

advantage

to

ask

a

few

more

then.

On

AHL,

could

you

perhaps

give

us

a

bit

of

an

update

as

to

where

capacity

might

stand?

I

note

that

you

talked

about

the

electronification

of

fixed

income

markets.

Perhaps,

there

are

other

markets

that

are

evolving

quite

favorably like

the

electricity

markets.

Where

can

capacity

go

for

your

more

constrained

strategies?

[Stephen Luke Ellis]

I

think

the

answer

is

there

will

always

be

some

parts

that

are

constrained.

Evo

last

year,

we

did

a

lot

of

great

things

to

create

extra

capacity

and

then

it

made

a

double-digit

return,

which

uses

up

a

lot

of

extra

capacity.

The

team

in

AHL

is

constantly

focused

on

generating

future

dollars

of

P&L

that

we

can

then

allocate

either

into

solutions

or

into

individual

products.

I

think

we

feel

like

there

is

plenty

of

capacity

going

forward,

even

if

some

of

the

individual

products

themselves

will

be

shut.

But

I

think

we

feel

like

there

is

room

to

do

plenty

more

within

AHL

where

we

are

today.

[Antoine Forterre]

And

in

particular,

TargetRisk

has

plenty

of

capacity

as

well.

[Stephen Luke Ellis]

Yeah,

exactly.

That's

extremely

scalable.

Cool.

Thank

you,

Arnaud. And

then,

[ph]



R56052

(00:49:12), you

get

to

ask

a

question.

I'm

unmuting

you

but

I

don't

know who

you

are,

so

you'll

have

to

help.

[Antoine Forterre]

I'd

like

to guess

Gurjit.

[Gurjit S. Kambo, Analyst, JPMorgan Securities Plc]

Hi.

Good

morning.

It's

– my

code

name

is Gurjit

from

JPMorgan.

[Stephen Luke Ellis]

Hi, Gurjit.

Good

to

hear

you.

[Gurjit S. Kambo, Analyst, JPMorgan Securities Plc]

Hope

you guys are

well.

Just

a

couple

of

questions.

Just

regionally,

where have

you

sort

of

been

seeing

the

strongest

demand?

Obviously,

SJP

mandate

aside,

outside

that,

where's

the sort of

strongest

demand

been

from

clients?

And

then,

just

briefly,

on

the

seeding

of

that book has

increased

now

to

about

$650

million.

Where

do

you

see

the

most

exciting

opportunities

for

seeding

new

strategies?

[Stephen Luke Ellis]

So,

in

terms

of

client

demand,

it

really

is

remarkably

global.

In

any

one

quarter,

there's

some

market

that

is

more

or

less

exciting.

But

in

the

second

half

of

last

year,

we

saw

good

flows

from

Australia,

from

Japan,

from

the

sort

of

Pan-China

region,

from

Europe,

from

the

US.

Sort

of

–

I

think

the,

look,

what's

striking

is

corporate

pension

plans,

defined

benefit

pension

plans

are

the

most

cash

flow-constrained.

Away

from

that,

what

you're

seeing

is significant

positive

cash

flows

in

the

sovereign

wealth

market.

And

particularly

in

a

world

with

oil

at

$80

and

$100,

you

could

imagine

there's

significant

flows

there.

In the public

pension

plan

market,

there's

a

lot

going

on.

So,

there's

really

a

lot

of

demand.

We

don't

have

a

problem

with

finding

demand.

Our

thing

is

to

build

capacity

and

things

that

maintain

the

alpha

quality

we've

got.

And

then

really,

we

find

client

demand

for

it.

So,

a

lot

of

the

new

things

we

do –

we

never

even get

to

build

a

new

product

because

the

capacity

gets bought

straight

off of that

by

sort

of

the

solutions

clients

who've

got

solutions

where

you

can

add

in

extra

pieces.

[Antoine Forterre]

And

on

the

seeding

side,

slide

23

is

a

good

proxy

for

where

you

end

up

seeing

our

seeding

as

it

mimics

the

areas

of

growth

in

our

business.

I'll

call

a

few

of

them.

ESG

capabilities

across

the

business.

Both

discretionary

and

long-only

is

one.

Private

markets

is

another

area

where

we're

putting

some

of our

balance

sheet

at

play.

Credit

in

various

guise

and

forms

is

another

one

that

we've

increased

seeding

and

looking

to

increase

in

the

future.

[Stephen Luke Ellis]

Yeah.

That

was nice

that we

avoided

saying

a

specific

fund

because,

Gurjit,

I

always

hate

picking

an

individual

fund

for

the

future.

We

have

an

amazingly

consistent

50/50

hit

rate

with

new

products

that

we

launch.

We've

spent

time

trying

to work

out

if

that's

too

high

or

too

low, but

it's

very,

very

consistent.

So,

if

we've

got 10

things

in

the

seeding

book,

with

confidence

I

would

say

five

of

them

are

going

to

succeed

and

be

real

revenue

contributors

for

the

firm

and

five

won't.

So

far,

we've

been

able

to

not

have

any

disasters, so

the

ones

that

don't

succeed

don't

cost

money;

the

ones

that

do

succeed

become

significant

contributors.

But

we

demonstrated

we

have

no

ability

to

say

which

are

the

five

great

ones

and

which

are

the

five

that

don't

work.

A

lot

of

it

is

just

luck

in terms

of

the

timing

when

you

launch

something

and

what

happens

in

markets

next.

[Antoine Forterre]

Makes

sense.

[Stephen Luke Ellis]

So,

thank

you

for that

question.

And

last

chance

for

anybody

to put

their

hand

up,

whether

you've

got

a

name

or

a signal

on

your name.

There

we

go.

We got

one

more.

Who

are

you?

[ph]



Ben (00:53:12),

welcome.

Hello.

I

was

just

really

interested

to

find

out

what

percentage

of

that

amazing

net-new

business

came

from

existing

clients,

please.

[Stephen Luke Ellis]

That's

a

good

question

to

which

I'd

have

to

go

and

look

up

the

answer.

You

can

assume

50%

of

it

came

from

existing

clients

and

50%

from

new

clients,

but

that's

partly

heavily

favored

by

a

couple

of

situations.

Understood.

Understood.

Thanks.

[Stephen Luke Ellis]

I

think

we

definitely

–

there

are

two

dynamics

that have

been

going

on,

one

of

which

may

loosen

up.

We'll

see

how

COVID

goes,

the

other

which

one.

The

first

one

being

in

a

COVID

world

with

less

travel,

clients

really

feel

comfortable

with

relationships

they

trust.

And

so,

topping

up

existing

mandates

or

giving

new

money

to

us

when

we

already

do

two,

three,

four

things

with

somebody

has

been

a

big

opportunity

for

us

because

in

a

low

travel

world,

that's

significantly

there.

It's

an

interesting

question,

how

much

clients

will

be

traveling.

At

the

moment,

I

would

say

clients

are

in

the

office

much

less

than

the

banking

world

or

the

asset

management

world.

We'll

see

over

time

where

they

go.

But

the

second

thing

which

is

a

strong

trend

for

clients

who

want

to

do

more

things

with

their

core

relationships

and

have

less

line

items

in

their

portfolio,

that

trend

is

I

think

very

strong.

And

you've

seen

particularly

in

the

liquid

alternatives

world

that

the

larger

hedge

fund

players

are

getting

larger;

the

larger

hedge

fund

players

are

generating

the

most

alpha,

they're

attracting

the

most

talent.

That

gets

more

inflows

and

is

a

virtuous

circle

for

those

of

us

inside

that

moat.

Thank

you.

[Antoine Forterre]

One

other

thing

is

the

total

AUM

from

the

largest

clients

is

in

the

several

trillion

dollars,

and

so

our

penetration

remains

very

low.

And

as

we

expand

the

range

of

programs,

strategies,

solutions

that

we

provide,

the

ability

to

grab

sort of

market

share

with

our

clients

keeps

on

increasing

and

that

has

been

very

helpful

to

us.

There's

plenty

of

room

there.

[Stephen Luke Ellis]

Super.

Well,

with

that,

I

think

we'll

say

thank

you,

everybody,

for

your

time and

attention

today.

I

hope

it

was

useful.

I

think

we

can

all

–

well,

we

think

Man

had

a

great

2021

and

delivered

really

well

for

our

shareholders,

and

we

think

we

can

do

that

going

forward.

So,

hopefully,

we'll

have as

good

as

one

of

these

next

year.

Thank

you,

everybody.

Have

a

good

day

out

there.

[Antoine Forterre]

Thank you.