Man Group on slow recovery path

By Laurence Fletcher

LONDON (Reuters) - Hedge fund firm Man Group showed it is slowly recovering from the industry's worst period on record, with better-than-expected profits and a small uptick in assets as client withdrawals slow.

The world's largest listed hedge fund manager (EMG.L: Quote, Profile, Research) said pretax profit more than halved to $302 million (183 million pounds) in the six months to end-September from $622 million a year before, although this was 8 percent above the group's estimate in September.

The result was boosted by performance fees from a fund based on its flagship AHL strategy, which has performed poorly this year but has achieved positive returns over the three months to September 30.

However, some analysts questioned the value of earnings from performance fees, which can fluctuate more than annual management fees.

"Performance fee ... is where the beat really occurs ... but this is regarded as lower quality," said analysts at Citi in a note.

Assets under management, on which fund firms earn regular fees, edged up to $44 billion at end-September from a trough of $43.3 billion reached at the end of June, helped by currency movements, and were little changed at the end of October.

Man Group CEO Peter Clarke, who told Reuters in January the firm was considering legal action over losses incurred from exposure to U.S. fraudster Bernard Madoff, said the firm is "looking at various class action lawsuits" but had not yet joined one.

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