Friday, 20 November 2009

Significance of Hedge Funds to Gartmore

Gartmore is to obtain a Listing on the Stock Exchange. The press release for the announcement states that as at 30 September 2009, Gartmore and its subsidiaries had £21.8 billion of assets under management ("AuM”) including a range of 14 equity long-short funds that make up £3.8 billion ($6.1 billion) or 17% of AuM. Since July 2009, Gartmore has had over $1 billion of net inflows into its alternative funds, but it received £924 million ($1.54bn) of net inflows in the third quarter of 2009 across the whole Group. So equity hedge funds contributed around two thirds of the net inflows in the third quarter this year.

In addition 87% of the hedge funds were above their high-water mark as at 30 September 2009, and these funds were up by 17.3% for the 9 months ended 30 September 2009. So it looks like the profit growth of the business will be a function of the returns of the hedge fund unit next year. That is how important hedge funds can be in the asset management business.

Wider implications of a Gartmore flotation were covered in the podcast on this blog on hedge fund M&A:

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