GAM is suspending more than $7 billion worth of bond funds after massive withdrawals. The move follows the unexpected sacking of their high-profile portfolio manager earlier this week.
The Swiss asset manager will prevent clients from redeeming their holdings in its absolute return bond funds, effective July 31, it said in a statement on Thursday. The flagship bond business had seen «a high level of redemption requests» following GAM's disclosure on Tuesday that it sacked Tim Haywood, the veteran manager of the strategy.
«The board of directors acknowledges that recent events have been a setback for the company», Chairman Hugh Scott-Barrett said. This is a dramatic understatement: GAM's stock price collapsed by one fifth on Tuesday following the news, and have recovered only a fraction of the lost territory.
GAM said it is considering options including liquidating the funds, which represent 7.3 billion Swiss francs ($7.3 billion), to maximize value and liquidity of value. The company said it is committed to ensuring that all investors are treated equally, and their interests protected.
Hefty Fee Earner
The company said it has enough liquidity to fulfill redemption requests, but that this would lead to a «disproportional» shift in their portfolio composition, at the expenses of investors who haven't sought to exit.
Haywood's (pictured below) absolute return bond business had been a hefty earner for GAM: More than half of the assets managed – 6.2 billion francs– are eligible for performance fees.
GAM disclosed the dismissal of Haywood, whom finews.asia has not been able to reach, for his risk management and record-keeping following an investigation that included an outside law firm. The company emphasized that the probe had raised no concerns over Haywood's honesty.
