GAM announces liquidation of suspended ARBFs

Zurich-based GAM Investments has announced that all subscriptions and redemptions in its absolute return bond funds (ARBF) have been suspended as of 31 July by the relevant fund boards of directors following a high level of redemptions.

The fund boards are considering all future steps, including fund liquidations. The impacted funds represented CHF7.3bn (€6.4bn) in assets under management as at 31 July 2018.

Following the suspension of Tim Haywood, 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.

The company will cease charging any management fees to these funds while they remain suspended or if they go into liquidation.

No other part of GAM’s CHF 163.8bn business is affected. 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.

‘Fully committed’
Group CEO 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. I am confident that this strong and broad team can continue to deliver the differentiated active management solutions that our clients need.”

Chairman Hugh Scott-Barrett added: “The Board of Directors acknowledges that recent events have been a setback for the company. However, we have absolute confidence in the strength of GAM as a diversified asset manager and the ability of its investment teams to deliver returns for clients. We have a clear strategy and management will continue to execute against it. The Board of Directors and the management team are committed to considering all avenues to optimise shareholder value as we continue to build on the many achievements to date.”

Christopher Copper-Ind
Christopher Copper-Ind is Publisher and Editor of International Investment. His previous publishing experience focused largely on the Middle East and emerging markets, and he was Editorial Director of The Business Year, based in Istanbul, for three years before moving back to London in 2017. He is the author of How to Negotiate, to be published by Macmillan in 2019.

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