Fund Management

GAM Wins Clearance To Start Liquidating Suspended Funds

Tom Burroughes, Group Editor, Valletta Malta, 28 August 2018

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The firm shut certain funds after a senior manager was suspended and now it has won the green light to start liquidating them.

GAM Investments has has won clearance to start liquidating its unconstrained/absolute return bond funds that have been closed to inflows and redemptions after the suspension of a senior manager.

"All fund investors will receive their proportionate interest in cash from the liquidation process," the firm said in a statement today. GAM Investments is part of Zurich-listed GAM Holding.

Each fund expects to be able to make the first payments in early September, returning between 74 per cent and 87 per cent of the Luxembourg and Irish-domiciled UCITS funds, and between 60 per cent and 66 per cent of the assets in the Cayman master fund and the associated Cayman and Australian feeder funds, it said.

The closure and liquidation move has been a blow to GAM. GAM has suspended the unit head of its unconstrained/absolute return bond strategy, Tim Haywood. GAM said it acted because “some of his risk management procedures and his record keeping in certain instances” fell short of requirements. The firm said that it had not found that its clients had been hit by the actions, but it was continuing to probe the matter. "The investigation has not raised concerns about his [Haywood's] honesty," it said at the time. As a result of Haywood's suspension, the funds were hit by redemption requests, prompting it to impose a suspension on dealings.

Explaining its approach to liquidation, GAM said it wanted to maximise value for the fund investors throughout the liquidation process, while ensuring "equal and fair treatment to all".

The company expects to make a further distribution for each fund before the end of September, and continue distributions in the coming months, dependent on market conditions, it said.

GAM also expects to offer alternative structures for investors who want to remain invested with the ARBF team. A UCITS fund is expected to be available for investors in the coming weeks, and the company is setting up a new Cayman fund as well.

"The suspension and the subsequent decision to liquidate the ARBF funds has been a difficult process, but necessary to ensure that we deliver on our principles of acting in the best interests of all fund investors and treating them equally and fairly. This does not take away from the fundamental strength of GAM as a diversified asset manager," group chief executive Alexander S Friedman said.

"We have spent the past few years restructuring GAM into a more efficient business with a less volatile earnings profile, while continuing to build out high performing, specialist strategies that are relevant for our clients. This has made GAM better positioned to weather a challenging environment, and we believe we will continue to attract clients to our platform and deliver value to our investors in the years to come," he added.

 

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