Fund Liquidations Hit GAM

Tom Burroughes

24 October 2018

Assets under management at Zurich-listed fell to SFr66.8 billion ($67.1 billion) at the end of September from SFr84.4 billion three months before, reflecting how investors have pulled money out of its Absolute Return Bond fund range after the unit’s manager was suspended.

At the end of June, there were SFr11 billion of AuM in the ARBF unit of GAM, and that has slumped to just SFr200 million, GAM said. The end-September figure excludes SFr1.9 ARBF-related assets and SF400 million ARBF-related assets in mandates that have been liquidated or will be liquidated in coming months.

GAM launched an investigation in the summer into the conduct of Tim Haywood after concerns about his activity were flagged by an internal whistleblower. GAM has seen heavy outflows from the funds since the suspension announcement. At the time of Haywood’s suspension in early August, GAM said that it acted because “some of his risk management procedures and his record keeping in certain instances” fell short of requirements. GAM 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 honesty," it said.

Across all of GAM’s activities, including third-party operations, group assets under management stood at SFr146.1 billion at 30 September, down from SFr163.8 billion at 30 June.

"The consequences of the suspension of an ARBF investment director marked a clear setback for GAM. We are taking immediate and near-term measures to support GAM's profitability. We have a stable and diversified business that we continue to build upon and we remain fully focused on delivering the investment returns expected by our clients,” Group CEO Alexander S Friedman, said.

The firm also recently announced that its group compliance chief had resigned for personal reasons, and named an interim replacement.