Man GLG Undervalued Assets & Man GLG UK Income Fund | 2018 Update

  • |
  • 29 mins 20 secs
Richard Philips, Head of the UK Retail Sales Team, joins Henry Dixon, Portfolio Manager to discuss the outlook for the remainder of 2018, the rise in bond yields, a summary of the Man GLG Undervalued Assets Fund and also the Man GLG Income Fund, followed by a short Q&A.


Man Group


Tel: 0207 144 2100
Visit Website

Man GLG Undervalued Assets Fund and Man GLG UK Income Fund
Live web conference, 17 May

RICHARD PHILLIPS: Hello, good morning everyone. My name is Richard Phillips, and I’d like to welcome you this
morning to the UK equity conference call with my colleague Henry Dixon. Henry’s going to give his outlook for the UK
equity market, and also how it impacts his two funds, the Man GLG Undervalued Assets Fund and Man GLG UK
Income Fund. So enough from me, I shall hand straight over to Henry.
HENRY DIXON: Many thanks, Richard. Turning to our first slide, I thought it would be useful to go back over how
we felt our outlook for 2018 was. I think we’ve wanted to make four points that we made at the start of the year and
repeat them now again today. Looking back at 2017 we felt it was notable that it was a period of global synchronised
earnings growth. And we’ve statistically gone back and looked at periods when the globe does inflect positively with
regards to earnings to break a down trend, and you end up in years like 1993, 2003, 2009. And going away and
coming out with common denominators of those periods in time, we would say there could be periods that are
characterised by commodity strength and also rising bond yields.
The second thing to say if we felt at the start of this year we felt that earnings growth expectations were incredibly
realistic, only circa 6% earnings growth pencilled in for this year, even less for next year 2019. But that contrasts with
slightly over 20% earnings growth that was the expectations for earnings growth at the start of 2017. To give you a feel
for long run averages, analysts tend to go for about 12-14% earnings growth at the start of the year, and the delivered
number ends up nearer 8%. So 6% looked a very realistic starting point. And I do think a low hurdle for earnings is
always a good one, because hopefully therefore you can get earnings coming in ahead of expectations, and that is
something that has transpired this year.
From our perspective with regards to the best combinations of value, balance sheet and earnings momentum, we felt
these resided in mining, oil and life insurance, and we’ll come onto some sector performance. But I think the last point
of caution we’d raise was regarding the debt within the UK market, and we do think certain sectors are leaning very
heavily on their balance sheets for M&A and also buybacks. And our one concern I think about the market would be
the ever increasing amount of net debt, which did fall modestly last year but not enough in our view. Coming onto the
oil price, we’ve seen a reasonably buoyant oil price this year. The Brent crude price in blue; the aggregation of analysts’
forecasts is the gold line. And there has, for the majority of this year there has been a situation whereby analysts have
been cautious versus the oil price, and that caution actually does actually remain into outer years as well. So it’s been
a good area for earnings momentum. Broadly speaking most days this year have been, you’ve had earnings
expectations building within the oil sector, very similar picture as well across the mining sector with regards to the
metal prices, and it’s been a really pleasing combination of good value, and also very good earnings momentum.

Moving onto bond yields, I think we’ve showed here data to the end of April. It’s clearly moved on a bit since then. The
US 10-year now is through 3%. It’s at a level that was higher than the taper tantrum you saw in 2013 for example. And
I do think rising bond yields ask two simple questions of equities, but I think they’re very important questions of
equities indeed. Firstly they ask questions around the multiple that you’re going to attach to the earnings stream and
then secondly they do place pressure on stretch balance sheets implicitly if bond yields are rising so will borrowing
costs in due course. And as mentioned I think there are certain sectors with

earnings performance has continued very strongly. However, what we can see on the left-hand side of this chart as we
look at the All Share, is that the All Share has been much more volatile, particularly recently, and particularly in the
February period we’ve seen this year with regards to the All Share falling from 4,300 to slightly below 4,000, and this in
the face of very consistent earnings delivery.
Now clearly there have been some earnings disappointments this year, but what you tend to find is the earnings
disappointments get the bulk of the headlines. But what it does show is actually the median company within the
market is actually doing a really good job, and at a market level we’re actually having a really good earnings
performance continuing into this year.
The combination of strong earnings and a volatile market means as we move to the next page we show you the big
contributors to the estimates momentum that we’ve seen here in 2018. So for example the best performing sector
with regards to earnings expectations. And what we’re showing you here on slide 8 is earnings expectations relative to
how we felt they were going to start at the start of this year. So that’s to say within industrial metals you’ve seen
earnings this year alone, just in the first four months of this year, being revised up by some 70%. Finally the food
retailers have got their act together. Tesco is probably leading the charge within there with regards to giving you
earnings upgrades. Mining is continuing on from industrial metals, oil and gas producers. And then to the downside we
look at aerospace and defence as being the worst.
Some sterling strength has played its part, but there’s also been very disappointing operational delivery at Cobham
and Meggitt, and there’s been nagging downgrades at BAE; household goods, personal goods as well. I think it talks
to some of the consumer staple areas just starting to come under pressure, both definitely with regards to like-for-like
performance, but also currency to some extent starting to work against them. But overall if we look at the middle
column there, FTSE All Share, we’ve had about a 1 to 2% upgrade this year relative to the modest expectations set at
the start of the year. And pleasingly as stock pickers we absolutely love this divergence that exists within the market.
It’s this type of divergence in earnings that gives us a huge amount of opportunity to work within. And we love isolating
good value with strong balance sheets and strong earnings momentum, and we’ve seen some of that this year.
As mentioned the second question that rising bond yields can ask of the market is around the multiple. And here over
the last three years we just show you the forward multiple of the All Share Index. As we saw earnings performance has
been good, but we’ve seen quite a bit of volatility particularly this year. But about three years ago we were paying
slightly over 16 times earnings for the All Share, and then in the debts there in mid-February when we saw probably
the market at its weakest in the face of good earnings. The All Share actually got within touching distance of its long
run average P/E. So the long run average P/E is about 12.6 times over the last 30 years, and we almost got to within a
whisker of being below 13 times. So I think having perhaps complained about overvaluation with the All Share for
these last few years, I think that is increasingly something that we cannot level at the UK market. I think it looks
approaching long run averages, and it looks cheap relative to international peers.

And then just with regards to valuation, you know, very definitely our feeling that starting valuation is the best predictor
of future returns. This is perhaps a chart that some of you have seen before, but we show you 10-year returns from
starting P/Es going back to 1974. So every dot here relates to a year going back to 1974. We highlight you a few years
of interest. But the X-axis here is your starting multiple, you know, low P/E on the left, so the lowest P/E on record that
we would have would be the slightly less than five times in 1974. And the highest P/E we’ve observed would be the
end of the 1990s as the tech boom was really hold, when you were paying almost 30 times earnings for UK equities.
The Y-axis is then your 10-year real annualised returns in that subsequent decade, and I do think the correlation is a
strong one. The lower P/E, you tend to pay for equities, the better your returns are prospectively. And as I say we
probably find ourselves, if you say we’re in and around 13 times today, this history lesson perhaps would be a
predictor of 10% real returns in the next decade. The disappointments I guess relative to long run averages would be
that 2007, 2006, 2005, when clearly the global financial crisis got in the way, but as judged on a 10-year view still
attracted real returns achieved from those valuations.
If we come onto our valuation view of the market, I think it is echoing to some extent the more reasonable valuation
that we see at an index level, as defined by P/E. As people who will know us know there are essentially two bits of
work we do on every single share that we analyse. Firstly, we like to ascertain how much money you would need to
replicate every single one of these companies, and that is the Y-axis. So we might observe that bottom left there,
perhaps the hardest business to replicate in the UK market would be that dot there, HMSO Hammerson. And we
might contrast that with perhaps the easiest share to replicate in the market, top left there, would be Just Eat, that
would be JE/.
The X-axis for us is our profit analysis. On the left-hand side you’re not making a huge amount of money relative to
your costs of being in business. And on the right-hand side you’re covering a cost of being in business handsomely.
We split this chart into three zones. Below that dark blue line is businesses that I think you would struggle to replicate.
Our thesis here is if you can expose yourselves to companies here that are soundly financed, cash generative and the
pressures against the business model are merely cyclical rather than structural, then this is perhaps some of the best
rewarded areas of the market.
What you also tend to find is that corporate activity can be a feature of this bottom portion of the market here. The
thesis is reasonably simple: it’s cheaper to buy these businesses than to build them external of the market. So for
example we can look there at bottom left again that dot HMSO Hammerson. That’s attracted the interest of a French
company called Klepierre who have actually ultimately walked away at this stage. To the right of the Hammerson dot
slightly lost within all the dots will be Sainsbury’s, which is clearly, and there’s been some corporate activity there with
Asda. And then to the right of that dot there you’ll see Barclays, which has clearly attracted the interest of an activist
shareholder. But it’s nice to see, in an environment of M&A it’s nice to see a lot of these situations here bottom left
coming to the fore.

The mid and right portion of this chart is an area of the market that’s cheap based on earnings, but here it’s absolutely
vital to marry up earnings growth as well as good value. It is crucially that earnings growth and that estimates
momentum that tends to price out value from a share and drive share prices higher. Perhaps the best exponent of that
in there, if you look at the X-axis between two to three you’ll see some life insurance shares within there, particular
Legal & General we’d highlight as being a share with both good value and also strong earnings momentum1
. And then
the top left portion of this chart for us is just an area of the market that looks too expensive.
As we split it up, we think it’s slightly over half the market by number is expensive. A third of the market good based on
earnings, and slightly over 10% of the market good value based on assets. But however if you look at it from a market
cap weighted perspective, and not the unweighted stock by stock perspective, because some of the large sectors
now are looking very cheap, namely mining, oil and banks, as I say at an index level I think the valuation looks much
more reasonable now.
Moving to the next page, we show you how this valuation has evolved. I really only want to talk to you about two or
three data points, but perhaps if you cast your eyes to the bottom left-hand corner of page 12, you’ll see that there
was only 28% of the UK market was expensive in March 2009. Perhaps the moment when we were most depressed
about value within the UK market was June 2015. That was that top right-hand box there, when it was almost 70%,
well almost 80% of market was overvalued. And now we’re starting to build some more reasonable valuation today,
and that’s a function of good earnings growth finally. And as I say the only thing holding us back from I think really
talking wholeheartedly about some value within UK equities is the fact that slightly over £400bn of debt resides in the
UK market, which is over twice that relative to the pre-crisis days of 2006/2007.
Moving to the next slide, we show you our portfolio. You’ll observe we have more asset value, much more earningsbased
value. This is dated to the end of March. If you go to the X-axis 3½% and up, you’ll see that dot there, LRD.
That was our best performing share this year called Laird plc, which fell to a bid from private equity. But hopefully
observably much more value with regards to its asset base, and also its earnings base, and we’ll come on and give
you some data points in the coming slides with regards to how the portfolio sits on sales, earning, assets and debt
versus the wider market.
With regards to page 14, we show you the split by market cap. That’s actually been reasonably static over these last
12 months. There was clearly a move quite heavily in mid-cap post-Brexit, but we’ve slightly more normalised that now.
And the European holdings at 3½% just threefold, they’ll be Swiss Re, Total and Green REIT in Ireland. With regards to
our overweights, materials is a reasonable overweight, although we have started to take some profits in materials,
probably most notably within Rio Tinto, which is now no longer in our top 10. But it’s still an area of the market for us
where we do see a combination of really good value based on earnings with market to market momentum from strong
commodity prices and balance sheets scaling towards net cash. So it still is an area of opportunity, but we’re definitely
looking to reallocate capital away from some of the better performing areas of that sector, and allocating it to some of
the laggards.

Within insurance, I just really want to talk about, we’ve had a reasonable move within insurance. Despite the fact it’s
been quite a consistent overweight within the fund over the last two years, we’ve definitely seen a move out of car
insurance, which would have been a big component of the portfolio about 18 months ago. And now it’s life insurance
which is really taking up the slack up there, and it’s a sector that we’re incredibly optimistic about. The life insurance
sector has always been a cheap one, there’s nothing new there. But today we probably have Aviva at nine times,
Legal at 10 and Pru at 12 to 13. As I say the value I guess has always been apparent, but we do think the capital
picture is rapidly improving. We think the bond yield environment is very helpful, and then also certain mortality trends
we think are very helpful with regards to capital and cashflow as well. So that’s rapidly becoming our largest sector.
Moving on to page 15, I think I just want to concentrate on the box on the top right hand side, and give you the up to
date figures with regards to the value within the fund on four basic but I think very relevant measures of sales, earnings,
assets and net debt. But the fund has slightly more sales than the wider market, so here we capture if you were to put
£1 into a FTSE tracker what you’d become the beneficial owner of. And that would be 84p of sales, 7p of earnings, so
about that 14-15 times earnings mark, 13p of tangible assets, and we must never forget that sting in the tail that is net
debt at about 23% of every pound you invest in the FTSE 100 will expose you to that quantum of debt. And just with
our fund in mind slight sales uplift, meaningful earnings uplift. So 8.1p of earnings for every pound invested in the fund,
approximately 12 times earnings. Today, we’re slightly less than that. Tangible asset backing a big uplift versus the
wider market, and we hope that that can give the fund some solidity in the downdrafts, and then crucially from our
perspective as contrarians it’s very important that we shy away from net debt in a meaningful way, which we do.
On page 16, there’s some performance statistics. I would say this year’s performance has been made up of falling less
than the market in the downdraft that we saw from the middle of January into February. And then we’ve just about
managed to keep up with the upward market. So today we find ourselves live today at about up 5% on the year with
the market up in the 2 to 2½% range.
If I might now move to the Man GLG Income Fund on page 17, our process in the income fund is threefold. Firstly we
employ the Man GLG Undervalued Assets Fund process, where the dividend yield is at least that of the wider market.
That first strand of the process makes up approximately two thirds of the NAV of the fund. The second strand of the
process is where we’re looking to isolate dividend surprise. We definitely observe how well dividend growth ahead of
expectations/dividend surprise is rewarded clearly in dividend growth ahead of your expectations. But also crucially I
think in some good share price performance. And then finally very selectively we will invest in bonds, and our checklist
to invest in bonds is threefold. There must be a listed equity that we can analyse, we must observe that there is equity
value within that equity and we must be able to access that equity value from a discount to par. So we therefore have
an attractive combination of running yield typically in the high single digits, but also crucially the opportunity for capital
upside in the coming weeks and months.

On page 18, we show you the Man GLG Undervalued Assets Fund process within the Man GLG Income Fund. And
then, which I have to say has the same thread that you would expect in the value fund of good value, more earnings
support as well, and each of these constituents yields at least that of the wider market.
On page 19, we will show you the FTSE 100 constituents, which is the blue dots, on two basic but I think relevant
measures: the X-axis on the left-hand side is the amount of net debt you have as a percentage of your market cap,
and we’d contrast that with cash on the right-hand side; the Y-axis is your free cashflow yield. The overall market
average is a free cashflow yield of about 3-4%, and it’s about, as previously disclosed about 24% of market cap is in
net debt. Some of the outliers here, if you look all the way to the left-hand side there is a company in the FTSE 100
with 140% of its market cap in debt. That will be utility company which is very much part of the business model, but
clearly that is the risk that you take on when you invest in that area of the market. But with regards to our dividend
growth portion of the fund, we look to pepper that top right-hand corner with more free cashflow than the market and
an attractive starting balance sheet. And if those businesses display some earnings momentum our hope is that that
can translate into a dividend surprise.
And finally we give an example of a bond situation that we invested in the fund in the middle of 2016. On the top right,
we show you the share price of Tullow Oil. We must all remember quite how depressed we were at the start of 2016
when the shares there were getting towards a pound, clearly EM very much in focus, and the amount of debt
extended to oil companies really weighing on investor sentiment. But we did start to see a change of trend in the oil
price probably by the end of March, and clearly the shares responded incredibly strongly to that, so £1.20 became
almost £3. From our perspective, it was probably our view that we felt equity values started to come into play with
regards to Tullow Oil by March into April, but categorically we didn’t think that it had equity value anywhere
approaching £2 a share. We felt it was probably slightly below a pound, but crucially we did feel that there was some
equity value there. So from our perspective we felt we could actually still expose ourselves to Tullow Oil, but crucially
we did that via the bonds and not the equity.
So if you look at their bond price there in the bottom right-hand corner, by the middle of March the bonds were still in
the 60s. The coupon was approaching six, so the running yield almost 10%, and actually the subsequent rights issue
that that company carried out has been a catalyst, and the recent oil price strength as well as being the catalyst for
those bonds to get above par. And from our perspective that is a situation whereby we will look to move on from those
On to page 21, we show you the dividend track record of the Man GLG Income Fund. When we took over the fund in
backend of 2013 it actually found itself outside of the income sector. We’ve shown some good dividend growth since
then. The trailing yield on the fund is about 4.7%. And towards the end of last year we took the decision to change the
frequency of dividends from the fund from semi-annual to monthly. And the confidence that we had to do that was
because of the shape of dividend payments from the UK market. So on the right-hand side here of page 21 we show
you the number of dividends you received from the UK market as a percentage and the value of dividends. The

biggest month by value is that August, and that’s when both oil majors and both pharmaceuticals pay you their
dividends. But the year-end for the fund is February, and then we enter a very rich period of time for dividend collection
March, April and May. And it was that frequency of dividend that gave us the confidence to pay dividends monthly.
And what we announced in March is that we’ll look to grow our monthly payments that we started as of September
last year. We’ve grown those. We intend to grow those monthly payments by 10% year-on-year.
With regards to the sector weightings, I guess the only difference to show you is that we probably lean more heavily on
insurance within this fund, less heavily on materials. That’s very much made up with a greater weight within life
insurance. Real estate was also a reasonable proportion there, but we continue to favour the cheapest square feet
rather than the biggest discounts to assets. And one of the biggest discounts to assets can be found in the large cap
area. We have a much greater preference for the logistics area of the markets where square feet are incredibly lowly
valued on a per pound basis.
With regards to the value characteristics of the Man GLG Income Fund on page 23, it’s actually the case here that the
Man GLG Income Fund has slightly more earnings than the value fund right here right now. We’re also leaning slightly
heavily on the house building sector here, where my earnings momentum perhaps isn’t quite strong enough maybe to
keep some constituents in the Man GLG Undervalued Assets Fund, but the house building sector to us does seem the
best combination of starting balance sheet strength and really attractive dividend streams. We have slightly more asset
value. We have fractionally more net debt, which is a function of our real estate weighting. But I do think the thing to
observe here is that the income fund is slightly cheaper than the Man GLG Undervalued Assets Fund.
With regards to performance, to the end of April the Man GLG Income Fund fractionally lagged the Man GLG
Undervalued Assets Fund. I think that was really a function of not owning Laird in the Man GLG Income Fund. But
actually since them actually the Man GLG Income Fund now finds itself fractionally head of the Man GLG Undervalued
Assets Fund. And again it’s been a similar theme of performance. I think we’ve been better in the downdraft, and
we’ve just about managed to keep up with the updraft that we’ve seen since the middle of February2
At that point I think I’ll had it over to Richard for any Q&A, but many thanks indeed for your time today.
RICHARD PHILLIPS: Thank you Henry. Just to reiterate again if you would like to submit a question please click
on the tab. We’ve got a couple already while some of you may be considering asking a question. Henry, first one: what
have you been doing with the tobacco sector given the weakness we’ve seen?
HENRY DIXON: So we’ve actually been buying into the tobacco sector recently. So you’ll observe if you go back
to our valuation for the FTSE, British American Tobacco now finds itself the right side of the line. I think crucially all we
need to see from the tobacco sector to become a good performer is we need to see some sort of debt apology. I think
it’s one of the most powerful trends you can observe is when corporates own up to too much leverage and then start

paying it back. It really attractively transposes itself into equity value. And I think we’ve just started to see, probably
particularly from Imperial Brands last week with regards to their determination to pay down some debt, maybe carry
out some non-core disposals, that I now think we can buy into a sector that is very cheap in absolute terms, and looks
very cheap relative to US peers for example.
RICHARD PHILLIPS: Next question, domestic versus overseas earners, has the risk reward become more
attractive for you in the domestically exposed parts of the market?
HENRY DIXON: A little, yes it has. I think we’ve been slightly changing our domestic exposure. As I say within the
value fund for example we have in recently months been perhaps reducing house builders, but I think we’ve found a
little bit more form within the retail sector, so Tesco you’ll observer is in the top 10; also a recently addition to the fund
approximately a month ago in the form of Next. There are other areas of the domestic market that we still continue to
steer clear of. The pubs for example are observably quite cheap, but we think there’s too much leverage there. But
there are certain instances now domestically where I think you can find good value, and hopefully a slightly more
improving economy into the second half of this year.
RICHARD PHILLIPS: Next one, do you believe that the macro trend of the market sensitivity to currency swings
will change this year?
HENRY DIXON: I think because currency is so observable, I always think it will affect investor sentiment. I think the
currency swings have been quite notable clearly in sterling. I think the biggest observable underweight globally is the
underweight to UK equities, and also within that sterling. And I think that was really starting to hurt investors probably
six weeks ago. We’ve seen a reasonable amount of weakness in sterling. I guess that’s helpful to earnings within the
market, but it will favour the overseas elements. And then clearly I think the talk of the town now is the weakness that
we’re starting to see in some emerging market currencies, so I would always be of the view that we must never
underestimate quite how emotional a subject currencies are.
RICHARD PHILLIPS: And finally do you have any thoughts on capital allocation, either from your portfolio holdings
or more widely?
HENRY DIXON: I think, what do I say? So I’m not saying we’re against every single bit of M&A. We’re categorically
not. But what we love to see M&A coming from is from a strong starting balance sheet. And then you have a situation
therefore where typically if it’s a reasonable deal you’ll start to see some earnings momentum coming through. But the
starting point is absolutely crucial of being soundly financed, because that then provides you with the balance sheet
option. I think too many companies last year acquiesced to the view that the bond market was going to be there for

close to free pretty much forever. And I think that’s really starting to actually weigh on a fee share prices. And I’m
amazed with the actions we’ve seen from Vodafone and Glaxo, I just think they’ve been probably too front footed with
regards to their balance sheet, and use of their balance sheet with regards to M&A. And I think I’m right in saying that
almost half the constituents in the fund have a net cash balance sheet, and we hope therefore really are pregnant with
that M&A option.
RICHARD PHILLIPS: Another here is given the disappointment in Q1 GDP numbers, what is your outlook and
view for interest rates?
HENRY DIXON: Yes, absolutely was a disappointing quarter, clearly came in well below expectations. I don’t want
to talk about the weather too much. I think we perhaps could also talk about a bit of a policy headwind at this point in
time, and the policy headwind comes in the form of benefits freeze I think for 5.5 million households. Auto enrolment is
something I also think we need to see how that pans out. That affects 11 million households. And so there are a few
things that play against the economy. But if we could keep it as simple as we possibly could I think with regards to
inflation I think it seems very, with a good degree of visibility that inflation will scale towards 2% from 3%, and wage
growth scaling towards 3% before perhaps we get a government that could be a little bit more front footed with
regards to assisting the economy. Because I think it’s been well documented that the government has played very little
part in the economy these last few years. But as we look at the government finances now, as they approach some sort
of balancing of the books, I think it’s fair to assume that the government will also be a bit more supportive to the
So I hope therefore from very low expectations as we sit here today, we can have a slightly more buoyant view, but I
still think we shouldn’t get too worried about rate rises. I think there will be a few over a few years, but that should still
be something hopefully that can perhaps re-rate the financials areas for example.
RICHARD PHILLIPS: Perfect, thank you very much Henry, and that looks like the end of the questions. So thank
you everybody for dialling in today.

1. The organisations and/or financial instruments mentioned are for reference purposes only. The content of this material should not be construed as
a recommendation for their purchase or sale.
2. Monthly returns (Man GLG UK Income Professional Acc C GBP)3
Past performance is not indicative of future results. Returns may increase or decrease as a result of currency fluctuations.
3. Performance represented by Man GLG UK Income Professional Acc C GBP, for which Henry Dixon assumed portfolio management responsibility
on 30 November 2013. Performance is calculated net of 0.75% management fee with income reinvested, and does not take into account sales and
redemption charges where such costs are applicable and no performance related fee is charged.
4. The original inception date of the fund was 5 March 1999.
Sources: Bloomberg and Lipper. Fund returns are calculated internally.
Important considerations
Prior to investing in the Fund investors should carefully consider the risks associated with investing, whether the Fund
suits their investment requirements and whether they have sufficient resources to bear any losses which may result
from an investment in the Fund. Investors should only invest if they understand the terms on which the Fund is offered.
Investors should consider the following risks and where appropriate seek professional advice before investing:
Market Risk
The Fund is subject to normal market fluctuations and the risks associated with investing in international securities
markets. Therefore, the value of your investment and the income from it may rise as well as fall and you may not get
back the amount originally invested.
Counterparty Risk
The Fund will be exposed to credit risk on counterparties with which it trades in relation to on-exchange traded
instruments such as futures and options and, where applicable, 'over-the-counter' ("OTC", "non-exchange")
transactions. OTC instruments may also be less liquid and are not afforded the same protections that may apply to
participants trading instruments on an organised exchange.
Currency Risk
The value of investments designated in another currency may rise and fall due to exchange rate fluctuations. Adverse
movements in currency exchange rates may result in a decrease in return and a loss of capital. It may not be possible
or practicable successfully to hedge against the currency risk exposure in all circumstances.
Liquidity Risk
The Fund may make investments or hold trading positions in markets that are volatile and which may become illiquid.
Timely and cost efficient sale of trading positions can be impaired by decreased trading volume and/or increased price
Financial Derivatives Instruments
The Fund may invest in financial derivative instruments ("FDI") (instruments whose prices are dependent on one or
more underlying assets) typically for hedging purposes. The use of FDI involves additional risks such as high sensitivity
to price movements of the asset on which it is based. The use of FDI may multiply the gains or losses.

Single Region/Country
The Fund is a specialist country-specific or geographic regional fund, the investment carries greater risk than a more
internationally diversified portfolio.

A complete description of risks is set out in the Fund's prospectus.

Important Information
The Fund is a sub-fund of Man UK ICVC, domiciled in the United Kingdom and registered with the Financial Conduct Authority. Full details of the
Fund objectives, investment policy and risks are located in the Prospectus which is available with the Key Investor Information Document in English
and in an official language of the jurisdictions in which the Fund is registered for public sale, together with the Report and Accounts of the UCITS.
The Fund's documentation are available free of charge from the local information/paying agent, from authorised distributors and from
In order to fulfil the fund's objectives the Prospectus allows the manager the ability to invest principally in units of other collective investment
schemes, bank deposits, derivatives contracts designed with the aim of gaining short term exposure to an underlying stock or index at a lower cost
than owning the asset, or assets aiming to replicate a stock or debt securities index.
The Fund typically carries a risk of high volatility.
The value of an investment and any income derived from it can go down as well as up and investors may not get back their original amount invested.
Alternative investments can involve significant additional risks.
This material is for information purposes only and does not constitute an offer or invitation to invest in any product for which any Man Group plc
affiliate provides investment advisory or any other services. Prior to making any investment decisions, investors should read and consider the fund's
offering documents.
Opinions expressed are those of the author as of the date of their publication, and are subject to change.
Some statements contained in these materials concerning goals, strategies, outlook or other non-historical matters may be "forward-looking
statements" and are based on current indicators and expectations at the date of their publication. We undertake no obligation to update or revise
them. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those implied in the
Distribution of this material and the offer of shares may be restricted and the minimum subscription amount may be higher in certain jurisdictions.
The product(s) mentioned within this material (i) may not be registered for distribution in your jurisdiction, and (ii) may only be available to professional
or otherwise qualified investors or entities. It is important that distributors and/or potential investors are able to ensure compliance with local
regulations prior to making a subscription. Please refer to the offering documentation for additional information.
Unless stated otherwise the source of all information is Man Group plc and its affiliates as of the date on the first page of this material.
Prepared by GLG Partners UK Limited ("Investment Adviser / Investment Manager") (company number 03385406) and communicated by Man Fund
Management UK Limited ("Authorised Corporate Director") (company number 03418585). The companies are registered in England and Wales at
Riverbank House, 2 Swan Lane, London, EC4R 3AD. Authorised and regulated in the UK by the Financial Conduct Authority. This material is
distributed pursuant to global distribution and advisory agreements by subsidiaries of Man Group plc ("Marketing Entities"). Specifically, in the
following jurisdictions:
European Economic Area: Unless indicated otherwise this material is communicated in the European Economic Area by Man Solutions Limited
which is an investment company as defined in section 833 of the Companies Act 2006 and is authorised and regulated by the UK Financial Conduct
Authority (the "FCA"). Man Solutions Limited is registered in England and Wales under number 3385362 and has its registered office at Riverbank
House, 2 Swan Lane, London, EC4R 3AD, England. As an entity which is regulated by the FCA, Man Solutions Limited is subject to regulatory
requirements, which can be found at
Recipients of this material are deemed by the respective Marketing Entity to be investment professionals and/or qualified investors that have
employed appropriately qualified individuals to manage their financial assets and/or are a financial services entity appointed by an investor
to provide fiduciary advisory and/or portfolio management services in respect of their financial assets. Marketing Entities will provide
prospective and existing investors with product and strategy information prepared by the Investment Manager and assist with queries
regarding investment strategies and products managed by the Investment Manager but will not provide investment advice or personal
investment recommendations, assess the suitability or appropriateness of any investment products and will not consider the particular

circumstances specific to any individual recipient to whom this material has been sent nor engage in any activity which may be deemed to
be “receipt and transmission of client orders” or “arranging deals” in investments.
This material is not suitable for US persons.
This material is proprietary information and may not be reproduced or otherwise disseminated in whole or in part without prior written consent. Any
data services and information available from public sources used in the creation of this material are believed to be reliable. However accuracy is not
warranted or guaranteed. © Man 2018