Man Futures Long vs. Short View

Chidem Kurdas

Compare Man Group’s AHL, one of the oldest and largest futures trading programs, with a conventional investment, say the S&P 500 index. You get very different short-term and long-term impressions.

AHL is the basis of a number of Man products. One, Man AHL Diversified, ended 2010 up 11.6%–about the same 12-month return that it made annually on average since its inception in 1998. That record may not sound particularly impressive for last year. But for the overall period since 1998, it is amazing.

The S&P 500 closed 1998 at 1229. Today (Tuesday January 18th), after a strong and persistent rally, the index closed at 1295. Over the 12 years, through ups and downs, it averaged around half a percentage point a year—-versus AHL’s over 11% annualized return.

Of course, had we compared the two investments from 1999 on, the index would have looked much worse. What with the stock bubble, it ended 1999 at 1469. So an investor that bought the index 11 years ago is still in the red while an investment in AHL Diversified has more than doubled.

Nevertheless, if you were to look at mainstream media coverage in the past few years, you might get the idea that AHL is in deep trouble.  Stories focused on losses and redemptions from the Man funds based on the program.

Indeed there were drawdowns, but over time the program recovered the losses. AHL remains among the best investments one could make in the long haul—-but the larger point is that performance comparisons depend crucially on your time horizon.


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