Jobs in GLG funds look insecure

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This hasn't really to plan; Man Group bought GLG Partners last year to diversify its revenue streams and reduce its reliance on its flagship AHL fund, but it's the new acquisition that's leaking assets. There's reason to believe that job cuts could be coming.

Assets at the world's largest hedge fund fell by 8%, to $65bn, between the end of June and 26th September. GLG's long-only strategies posted a negative performance of $1.1bn in Q2, and outflows from its fund styles contributed to a $2.6bn decline during the quarter.

Man Group has already pared back its headcount in the wake of the GLG acquisition; cutting 200 jobs in October last year.

Despite this, headcount in the UK has increased over the last year. It now employs 726 people, compared with 661in 2010. Staff numbers in all of Man's other country offices have declined in the last 12 months.

However, recent hires suggest that the firm is focusing on growing its Asian footprint. It recruited David Mercurio as head of Asia equity and co-head of global equity strategies in September, as well as doubling the number of staff in its Hong Kong-based AHL CTA trading team in May.

GLG employees are also relatively expensive. Historically, Man Group has spent 18-25% of its revenues on compensation, compared to 55-65% at GLG. Man paid out $325m in bonuses for 2011, a 68% increase on last year. Some of this can be down to increased staff numbers and improved revenues, but the comp ratio crept up to an unusually high 32% for the period.

In fairness, Man's results come amid a difficult period for hedge funds. Globally, hedge funds fell by an average of 2.3% in September and 3.47% in August, according to data from the HRFX global hedge fund index.

Nonetheless, after a tumultuous year, Man's AHL fund has contributed $1.5bn during the last three months. It's also hiring in London for a range of technology and quantitative roles.

AHL is, of course, a computer-driven fund while GLG's hedge funds are overseen by individual portfolio managers. It seems more likely, therefore, that any potential cuts could hit these funds disproportionately hard.

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