GAM Investments’ assets under management fell more than a third last year, as the firm felt the fall-out from its Absolute Return Bond strategy saga, which cost its manager Tim Haywood his job.
AUM sat at CHF 56.1 billion at 31 December 2018, down from 84.4 billion at the start of the year. This reduction comprised CHF 11 billion from liquidating the Absolute Return Bond funds (ABRF), CHF 10.5 billion in other outflows, and CHF 6.8 billion in negative market movements.
Pre-tax profits at the Swiss manager fell 26.6 percent, from CHF 172.5 billion in 2017 to CHF 126.7 billion in 2018.
GAM’s assets under management comprised seven percent private client assets, 49 percent intermediaries, and 44 percent institutional. The firm also has a white labelling business, which has CHF 76.1 billion under management.
GAM suspended fund manager Tim Haywood in August over its ABRF strategy. In its annual report, it said: “We had to take the difficult decision to suspend the investment director responsible for ARBF, initially on the basis of concerns raised internally about his conduct.
“More facts and circumstances were uncovered and a number of misconduct issues identified during an internal investigation which was supported by external counsel. Following the conclusion of the investigation and the disciplinary proceedings, the suspended investment director has now been dismissed from the company for gross misconduct.
“There was serious failure to achieve the standard of skill and care which were to be expected of someone in his position.”
The firm said it would reduce personnel and expenses worth CHF 40 million this year.
“The ARBF event has and will cast a shadow on GAM’s financial performance. Following the chief executive change in November 2018, with David Jacob taking on the interim role alongside his position as a member of the board of directors, we announced a comprehensive restructuring programme.
“The aim is to strengthen our core business, reduce complexity and support our profitability, while remaining focused on creating value for our clients.”
