Volatility sees clients withdraw money at growing pace from Man

Chief executive Peter Clarke said: “Sentiment is clearly in the doldrums. We are assuming sentiment remains suppressed.

“A lot of what happens from here will be dictated by wider market sentiment.”

Withdrawals accelerated in September, making the latest quarter the worst for the group since shortly after the collapse of US investment bank Lehman Brothers.

Man’s trading update raises the possibility of heavy client outflows across the hedge fund industry, which has recovered strongly after the credit crisis in 2008 and 2009.

It also raises questions about Man’s takeover of smaller rival GLG last year, which it bought to diversify away from its main computer-driven fund AHL and enhance earnings power.

Investor confidence has been hit by the euro zone’s deepening debt crisis and fears of another global recession, driving asset prices lower.

Mr Clarke said a couple of large institutional investors – the type of client seen as more patient than individual investors – had each pulled out “a few hundred million dollars”.

Analysts at Peel Hunt said in a note: “This statement is clearly disappointing.

“It is clear that there are significant downgrades (to our forecasts).”

Man was hit by poor performance and redemptions from hedge funds run by its GLG unit.

In particular, its Alpha Select hedge fund fell 13.7 per cent in the five months to August, while its European Opportunity fund was down 12.4 per cent and its Emerging Markets fund was 14.7 per cent lower.