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Pay for Revenue

Haywood, who competed with other funds managers for airtime with clients and GAM’s marketing team, flourished. He established a media presence, making frequent trips including to Switzerland to drum up interest in the absolute return product range.

In a boutique set-up such as GAM’s, Haywood enjoyed wide-ranging autonomy and was motivated to grow the ARBF business with a pay scheme linked to the boutique’s revenue (the norm for GAM’s fund boutiques).

Parade of Peacocks

He exhibited little of the swagger which many star fund managers adopt, adopting a concise and eloquent tone instead. In his most recent star turn, on broadcaster «Bloomberg» in February(video below), he was in his element talking about U.S. interest rates rising. 

A former GAM colleague remembers him being «certainly not exemplary in his record-keeping, but not some massive rogue character.» He was viewed as more of a team player than many of his peers in a firm which is the finance equivalent of a parade of peacocks.

Reversing Outflows

From 2014 onwards, the absolute return bond funds were plagued by outflows. By 2017, Haywood managed to stanch the withdrawals and return to inflows.

By February, Haywood was telling clients to shun the torrid bond market in favor of equities instead.

«I may be one of the few fund managers in the world who has been promoting to those who can only buy securities, to buy something else, as opposed to being permanently optimistic for the asset class I represent», Haywood told a specialty publication.

Beefed-Up Compliance

What happened between then and his suspension on July 31 is unclear. By June, an A$-denominated feeder fund to Haywood’s absolute return business began suffering withdrawals, eventually leeching three-quarters of assets, «Bloomberg» reported.

GAM says the Aussie withdrawals followed «business-as-usual meetings with a consultant», with no discussion of Haywood’s suspension the following month.

Also in June, Natalie Baylis, a veteran lawyer for the U.K. regulator Financial Services Authority, joined GAM’s top management. The asset manager denied a link between Baylis’ entrance at GAM, which marked a reinforcement of the firm’s compliance, and Haywood’s suspension.

CEO Imperiled

As recently as last month, GAM said of ARBF that «Additional hires [are] already being recruited due to client interest in this product globally.» The firm says Haywood’s honesty isn’t in question, it didn’t find any conflicts of interest, nor have clients come to harm.

Nearly all of the investment staff snapped by from Augustus, including the suspended Haywood, remain with GAM to this day.

Since Haywood’s suspension, GAM’s stock has shed nearly one-quarter of its market capitalization. The scandal has imperiled the position of CEO Alex Friedman and raised the specter of a firesale to salvage GAM's other pieces – a move which may eventually bring transparency to the Haywood episode.