The firm has acted after its suspension of an investment director sparked a flood of requests to pull money out of affected funds.
GAM Investments has halted inflows and outflows from its unconstrained/absolute return bond funds – together holding SFr7.3 billion ($7.34 billion) of assets – after a high level of redemption requests sparked by its suspension of a senior investment director.
The suspension took effect from 31 July. The fund boards are considering steps including liquidating the funds to maximise value and liquidity for clients, GAM said in a statement yesterday. GAM Investments is part of Zurich-listed GAM Holding, which reported financial results this week.
As announced and previously reported here, 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.
In its latest statement GAM said the ARBF funds have experienced a “high level of redemption requests”. “Although the funds have the necessary liquidity to serve these requests, such actions would lead to a disproportional shift in their portfolio composition, which could compromise the interests of remaining investors,” it continued.
“GAM is committed to ensuring equal treatment of all investors and protection of their interests. The company is actively engaging with clients and is focused on resolving the situation as quickly as possible for investors. The company will cease charging any management fees to these funds while they remain suspended or if they go into liquidation,” it said.
The firm added that no other part of its SFr163.8 billion (as of 30 June, 2018) business is affected.
Earlier this week GAM Holding reported a 21 per cent year-on-year rise in underlying pre-tax profit to SFr91.3 million ($92.3 million).
“The company's other investment teams and its third-party managers are continuing to manage client funds as normal. The group's investment processes and risk management across the firm remain robust,” it said regarding other parts of its business.
Group chief executive Alexander S Friedman said: "We are fully committed to safeguarding the interests of our clients. We are working with the relevant fund boards to ensure that we maximise value and liquidity for ARBF investors, and are looking at establishing alternative structures for clients who want to remain invested with the ARBF team.”