* To head up $14.2 bln fund of funds unit
* Continues overhaul since $360 million Madoff loss
* Former FRM managing director, now fund manager at GLG
LONDON, Aug 24 (Reuters) - Hedge fund firm Man Group has hired former FRM executive Luke Ellis to head its fund of funds business, continuing the unit's overhaul since it lost $360 million investing with U.S. fraudster Bernard Madoff. Ellis, who was managing director of fund of hedge funds firm Financial Risk Management (FRM) until 2008, will replace Herbert Item as head of Man Group's $14.2 billion multi-manager business, Man said in a statement. Man formed the business last year through the merger of Swiss-based RMF -- the unit headed by Item that invested in Madoff's Ponzi scheme -- with Glenwood, another fund of funds business. Ellis now works for GLG -- the fund manager Man is in the process of buying -- as non-executive chairman of its multi-manager business and manager of its Multi Strategy fund.
Before he joined FRM in 1998 he was head of JPMorgan's global equity derivatives and equity proprietary trading units. Item is to retire after 13 years at Man, Man Group added. Funds of hedge funds have been under pressure since the credit crisis, after some invested with Madoff and some limited clients' access to their cash, and investors continue to withdraw money from the sector.
"The future of the multi-manager industry will be all about addressing specific client needs with a range of services, from ready made portfolios to direct access through managed accounts to risk analysis and management," said Ellis in the statement. (To read the Reuters Funds Blog click on http://blogs.reuters.com/fundshub; for the Global Investing Blog click on http://blogs.reuters.com/globalinvesting/) (Reporting by Laurence Fletcher; Editing by Jon Loades-Carter)