Some Good News For Embattled GAM As Assets Rise

Tom Burroughes

18 April 2019

Zurich-listed , hit by heavy client outflows last year amid the sacking of a senior manager, yesterday said that total assets under management and private labelling rose in the first three months of 2019. AuM rose to SFr137.4 billion ($136.2 billion) as at 31 March, from $132.2 billion at the end of 2018.

On the investment management front, AuM stood at SFr55.1 billion, down by 2 per cent from 31 December 2018, driven by net outflows of SFr4.0 billion, partially offset by positive market and foreign exchange movements of SFr3.0 billion. There was “continued improvement of investment performance, with 70 per cent of AuM in funds outperforming their respective benchmark over the three- and five-year period”.

In the private labelling business, net inflows were SFr1.9 billion, while positive market moves and foreign exchange adjustments stood at SFr4.3 billion, taking total AuM on this side of the business to SFr82.3 billion, a rise of 8 per cent from the end of last year.

Investors pulled billions from GAM’s Absolute Return Bond fund range last year after the unit’s manager, Tim Haywood, was suspended in late 2017. (He has now been fired, and is reportedly contesting this decision.) The firm launched a probe into Haywood's conduct in the summer of 2018 after concerns about his activity were flagged by an internal whistleblower. At the time of Haywood’s suspension in late July, GAM said that it acted because “some of his risk management procedures and his record keeping in certain instances” fell short of requirements. One casualty of the affair was Alex Friedman, its chief executive, who resigned.

GAM said that it expected to complete the liquidation of the ARBF business by the middle of July. It also said that after the sale of two material assets, a further ARBF distribution will take place over the next two weeks. This means that 89–95 per cent of the onshore and 80–84 per cent of the offshore funds’ assets will be returned to clients.

GAM has entered into an agreement, the result of which will be the sale of the material remaining ARBF assets at the valuation at which they were purchased, the firm said.

“While the investment performance over a three- and five-year period has improved, first quarter net flows continued to be impacted by ARBF-related matters. Having now sold all but the final group of material assets and with an agreement in place which leads to the sale of them as well, we look forward to putting this difficult period behind us,” David Jacob, Group CEO, said.

“Our priority during the liquidation process has been to maximise liquidity and value for clients, while ensuring fair treatment for all,” he added.