Haywood blow-up haunts Gam as specialist bond funds lead outflows

Net redemptions from investment arm hit £1.1bn over the quarter

Gam continues to be haunted by the blowup of Tim Haywood’s multi-billion pound fund range as its specialist fixed income products and absolute return funds leaked client cash.

The Swiss manager was unable to stave off another quarter of redemptions with clients yanking a further £1.1bn (CHF1.4bn) from its investment arm, pushing assets down 2% to £39.9bn.

Gam has endured a torrid period over the last 14 months, following the dismissal of star manager Haywood (pictured) and the liquidation of its £8.5bn absolute return bond fund range.

The Zurich-based group racked up a €12.3m loss in H1 and appointed Blackrock veteran Peter Sanderson as CEO following a management shakeup.

Sanderson said net outflows had been driven by risk-off sentiment in August. He noted that the group took in net inflows in July and flows in September were broadly flat.

Redemptions were offset by £234m coming into its private labelling business in the three months to 30 September 2019 and a further £548m from positive market movements.

Total assets under management at the end of the period stood at £106.2bn.

Fixed income haemorrhaging cash

Most of the money Gam lost over the quarter was from its specialist fixed income products.

This segment of the business recorded £860m worth of redemptions or 80% of the group’s total net outflows.

Gam said outflows were primarily driven by the Gam Local Emerging Bond and Gam Star Credit Opportunities funds. It also saw client redemptions from institutional mandates.

Gam’s multi-asset, equity and absolute return funds also ended the period with net outflows, losing a combined £549.5m.

Its alternatives and systematics funds bucked this trend, however, delivering net inflows of £78.4m and £235.4m respectively.

Restructuring update

Sanderson also provided an update on the firm’s restructuring stating it was on track to deliver at least £31.4m worth of cost savings by the end of the year.

So far the group has agreed to hand over its precious metals business and money market funds to Swiss cantonal bank ZKB for £11.6m.

Gam has quashed rumours it is eyeing up an M&A deal however, despite rumours that US fund giants Columbia Threadneedle and Legg Mason, as well as Schroders and financier George Soros were all circling various parts of the business.

Earlier this month it denied it was speaking to Italian insurer Generali about a potential deal.

“Gam’s business proposition remains strong and the continued outperformance of the majority of our funds positions us well with clients looking to meet their financial objectives by investing in our differentiated active strategies,” Sanderson said in the trading update.

“I see great potential across the business and I am currently focused on setting out a clear path to greater efficiencies and profitable growth.”

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