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After a robust run starting earlier than Christmas, UK shares have pulled again from current peaks. Since closing on 3 March, the blue-chip FTSE 100 index has misplaced 3.9%. In the meantime, its mid-cap cousin, the FTSE 250, has held up higher, slipping solely 2.5% since then.
These declines are far smaller than these seen within the US, the place two main market indexes entered correction territory (down 10%+). The S&P 500 index at present stands 9.1% under its 19 February excessive, having fallen 10% under this stage on Tuesday, 11 March. The tech-heavy Nasdaq Composite index has fared even worse and now lies 12.9% under its 16 December 2024 peak.
Low cost shares get cheaper
Warren Buffett, my funding hero, as soon as posed this query to traders: “If you’re going to eat burgers for the rest of your life, do you want the price to go up or down?” Clearly, any wise individual would need the worth of products they purchase to go down, making them simpler to afford.
For me, the identical applies to shares — when inventory costs fall, I don’t get upset. As a substitute, I get excited throughout Mr Market’s occasional meltdowns, as they permit me to purchase into nice corporations at higher costs. Thus, when share costs droop, I am going looking for worth and earnings shares so as to add to my household portfolio.
A FTSE 250 faller
One London share I’ve watched slide is that of Man Group (LSE: EMG). Beginning out as a buying and selling home in 1783, Man has grown to develop into the world’s largest publicly traded hedge-fund supplier. Man affords actively managed funding funds in private and non-private markets to each institutional and personal traders.
Man’s shares have slumped over the previous yr, falling steadily since their one-year excessive of 279.23p on 4 April 2024. As I write, they commerce at 207.86p, down greater than 1 / 4 (-25.6%) in 11 months. Nevertheless, they’ve simply beating the broader FTSE 250 over the previous 5 years, surging by 106.2%, versus 27.6% for the mid-cap index.
One cause for Man’s share-price weak point may very well be a decline in its property underneath administration. At end-2024, these totalled $168.6bn, down from $178.2bn at mid-2024. This was partly on account of a $7bn autumn withdrawal from one institutional shopper.
A dividend delight
Regardless of its weak shares, Man reported increased pre-tax income of $398mn for 2024, up 43% on 2023. This success allowed the group — whose market worth is £2.5bn — to carry its money dividend and in addition launch a share buyback programme price $100m.
This FTSE 250 agency’s shares now provide a market-beating dividend yield of 6.5% yr. That’s effectively forward of the FTSE 100’s money yield of three.5% a yr. And it’s this juicy payout that prompted me so as to add this inventory to our household portfolio in August 2023.Although we’re barely down on this commerce, Man’s dividends have pushed this deal into revenue.
After all, as a hedge-fund supervisor, Man’s methods can fare badly throughout market meltdowns and spiking volatility. These circumstances brought about its inventory to plunge in Covid-hit 2020, earlier than it rebounded strongly. However, buying and selling on a low a number of of simply 10.7 occasions earnings, this FTSE 250 share seems too low-cost to me. Therefore, I received’t be promoting our inventory anytime quickly!
