GAM's Assets Under Management Slumps, Reiterates Dividend Cancellation

Tom Burroughes

21 February 2019

, which has been hit by heavy client outflows amid the suspension of a senior manager last year, today confirmed that for 2018, assets under management have slumped to SFr56.1 billion ($56.0 billion) from SFr84.4 billion a year ago.

The full-year report issued today confirmed that GAM was slashing costs and will not be paying a dividend for 2018. GAM also reconfirmed its financial outlook as stated in December last year, expecting this year’s underlying profit result to be “materially below” that of 2018 because of the slide in AuM.

Investors have pulled billions from GAM’s Absolute Return Bond fund range after the unit’s manager, Tim Haywood, was suspended last year. The firm launched a probe in the summer into Haywood's conduct 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.

There were also net outflows of SFr10.5 billion from non-ARBF strategies run by GAM; softer markets and adverse forex markets hit AuM to the tune of SFr6.8 billion, it said in a statement.

GAM logged an underlying profit before taxes of SFr126.7 million in 2018, down from SFr172.5 million in 2017. On an IFRS accounting standard basis, the firm logged a net loss of SFR929.1 million in 2018, reflecting a goodwill impairment charge, impairment charges related to Cantab investment management and client contracts (IMCCs), and restructuring charges.