GAM still in decline in the third quarter

The haemorrhage continued in the third quarter for GAM Asset Manager. The Zurich group has suffered cash outflows in its home investment strategies. White label products are better.

Between July and September, net outflows reached 1.1 billion francs in the group, according to indications provided Thursday. The amount under management remained more or less stable (-0.2%) at 135.7 billion.

Investment Management activities (GAM brand) have declined in almost all strategies. Cash outflows amounted to 1.4 billion. In its press release, the group points to the risk aversion to customers in August.

Total assets under management amounted to CHF 51.1 billion, down 1.9%, despite a positive contribution from financial and foreign exchange markets of up to CHF 400 million.

This unit has been suffering since the breakup of the Tim Haywood affair, the star manager initially suspended and then fired. A whistleblower had reported irregularities in the risk management and documentation of Absolute-Return-Bond (ARBF) funds.

During the third quarter, GAM fully liquidated the disputed funds and repaid the customers. However, the Haywood episode seriously undermined the Zurich group's trust capital, whose business volumes have eroded beyond the ARBF strategies.

Objectives confirmed

Having arrived at the head of the asset manager in September, Managing Director Peter Sanderson remains confident. "GAM's business model remains strong. Thanks to the outperformance of the majority of our funds, we are well positioned with our clients to achieve their financial goals, "he said, quoted in the release.

In white label products (Private Labeling), the mass under management fell 0.7% to 84.6 billion francs, thanks to cash inflows of 300 million and a market contribution of 300 million also. In Switzerland, this activity has suffered a decline (300 million), offset by entries into Europe.

These figures are mixed compared to the forecasts of analysts solicited by AWP. Disappointments are to be found on the side of outflows of money (Group and Investment Management), larger than expected. Vontobel was expecting a $ 52 billion estate under house management.

For 2019, management confirms its objectives and still expects a lower operating result than last year, due to a significant decrease in assets under management. The financial markets will still be under the influence of a certain volatility caused by the global economic slowdown, commercial disputes and geopolitical tensions.

In order to respond to this challenging environment, Sanderson aims for "efficiency gains and profitable growth". The ongoing restructuring program is expected to save at least CHF 40 million in 2019 and will be fully effective next year, says GAM. New measures to simplify structures will be taken in 2020 and 2021.