West Palm Beach (HedgeCo.net) – A pioneering collaboration that brings together the best of the academic and finance worlds has been such a success that the venture has outgrown its premises, just a year after its establishment.

Man Group plc, one of the world’s largest alternative investment companies, founded the Man Research Laboratory ("MRL"), in Oxford in September 2007. The role of MRL is to undertake commercial research projects for the various quantitative groups within Man, and in particular, for its wholly owned subsidiary fund manager AHL. Although quantitative techniques are widely used throughout Man, it is within AHL that they have been used extraordinarily successfully for more than twenty years.

The laboratory was established at the same time as the Oxford-Man Institute of Quantitative Finance ("OMI"), which is part of the University of Oxford. Man provides the principal funding (an initial commitment of GBP 13.75 million – $21.9 million) for the institute, which shares common facilities with the laboratory.

"The partnership between Man and the University of Oxford is unique," said Dr Anthony Ledford, a senior executive at AHL and Research Director of MRL.  "While other hedge fund managers have opened their own, private research centres, none has done so in partnership with the University of Oxford itself."

"The aim for both the University and Man is to create a stimulating environment of research and innovation, where ideas flourish," Dr Ledford continues. "Practitioners from a wide spectrum of disciplines can bring their skills into collaboration, and learn from each other."

Staff numbers are expected to double over the coming year. OMI, which brings together academics from a wide spectrum of Oxford University departments, already has fourteen faculty members, another fourteen associate members and four permanent academic staff – three research fellows and the institute’s Director – along with twelve higher-degree students.

"The collaboration has been a great success", Dr Ledford added. "It has exceeded the expectations of both the University and Man. Planned staffing levels in both the laboratory and the institute were met ahead of schedule, and the number of applications for positions has necessitated a search for larger premises."

Although the institute and laboratory are independent of each other and follow different research programmes, there is significant interaction between them. This has benefited both parties, and OMI is attracting significant international attention. In its first year, as well as a series of over one hundred seminars and presentations, it has hosted a symposium and two conferences – one of its guest speakers being a Nobel Prize winner.

MRL has already made significant commercial contributions to Man and AHL, which specialises in systematic automated trading. A new trading model – first conceived at the laboratory – which operates on high frequency data is now actively trading the global markets and providing new sources of enhanced investment opportunities. Another benefit is the magnetic effect the laboratory is having in attracting the next generation of top talent into Man from around the world.

Dr Ledford added: "The interaction between our Research Lab and the Institute has put us at the cutting edge in our field. Looking at what we’ve already achieved, we’re really excited about the prospects for the future."

Alex Akesson

Editor for HedgeCo.Net
Email: alex@hedgeco.net

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Guardian Unlimited - Lights flicker and numbers flash up on small dials at the front of two computer servers nicknamed Meg Ryan and Jamie Lee Curtis by traders at the London headquarters of hedge fund giant Man Group.

The shiny new technology is part of the nerve centre of AHL, one of Man’s most successful hedge funds, which has notched up returns of 7 per cent in the past month alone, despite the financial turmoil.

Others in the industry have been less fortunate. Analysts warn that global hedge funds are facing the biggest bloodbath since their rapid expansion in the early 1990s, especially in Britain, where about half of 2,000 firms are expected to be taken over by larger rivals or liquidated.

But don’t expect the funds to shout from the rooftops about their travails. They are notoriously secretive, preferring to work quietly in a sector conservatively estimated to account for around $2trn at the height of the boom.

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Bloomberg - Man Group Plc, the largest publicly traded hedge-fund manager, rose in London trading after its biggest pool reported gains for a fourth consecutive week.

“It increases the probability that they will be earning performance fees on the fund,” said Gurjit Kambo, an analyst at Numis Securities, who rates the stock an “add.”

AHL Diversified Plc gained 1.9 percent in the week to Oct. 20, and is up 12 percent in the past 12 months, Man said in a statement yesterday. AHL, whose computer-trading program dictates about a third of Man’s investments, is now closer to its so-called high-water mark, the level above which the firm begins to collect performance fees.

London-based Man rose as much as 6.1 percent and was up 14.5 pence at 368.5 pence by 10:10 a.m. The stock has gained 16 percent so far this week, valuing Man at about 6.3 billion pounds ($10.3 billion).

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Reuters UK – Recent sharp moves in global currencies are the start of longer trends set to produce strong money-making opportunities for trend-following hedge strategies, according to Insch Capital Chief Executive Chris Cruden.

Cruden, whose Insch Interbank Currency Program is up 7.96 percent over the year to end-September before fees compared with a 27.6 percent fall in the MSCI World index, points to the rise of the Australian dollar versus the U.S. dollar between 2001 and 2008 as an example of previous long-term currency moves.

"I imagine the nature of the shakeout will produce sustained moves lasting many months if not years," said Cruden, a former director of Adam, Harding and Lueck Asset Management AHL.L, now the flagship hedge strategy of Man Group.

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