Man Group wins €1.2bn mandate from German pension
Man Group has won a mandate, initially of €1.2bn, from Germany’s largest public pension fund to invest in hedge funds via Man’s managed account platform.
The Bayerische Versorgungskammer, which runs about €50bn, will start allocating to funds via Man’s platform over the course of this year, and could grow its allocation over time.
Its commitment more than reverses the $1bn withdrawal that one client of Man Group made in the third quarter of last year, from European long-only equity strategies that Man inherited by buying GLG Partners.
Man has grown managed account assets to exceed $8.7bn, and has run the structures for more than a decade.
Dajana Brodmann, BVK’s deputy head of alternative investments, said: “Man impressed us with the depth of their expertise, their long-standing experience with managed accounts and robustness of their risk management processes.”
Man said BVK would benefit from increased transparency, liquidity and control, using managed accounts. They have become increasingly popular since the crisis due to some hedge funds gating, some not following internal guidelines and one, which Bernard Madoff claimed to run, defrauding investors of about $17bn.
BVK will have sole discretion for the selection of managers and the construction of portfolios.
The news of BVK’s decision comes as Towers Watson said the number of hedge fund mandates grew last year by 50%.
Demand for funds of hedge funds grew back to their 2008 levels, but there is more demand from pensions for direct hedge fund allocations, now accounting for 60% of all the consultant’s hedge fund searches.
Equity, fixed income and insurance hedge fund strategies are the most popular, according to Craig Baker, global head of manager research.
The number of equity mandates – mainly global programs but increasingly also emerging markets – grew by over 30% last year, while bond searches fell 30%, US and Eurobonds leading the fallers.