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Gottex Fund Management assets grows to $8.9bn; core strategies ahead of benchmarks

Wednesday, July 20, 2011

Joachim Gottschalk
Opalesque Industry Update - Gottex Fund Management Holdings Limited (Gottex), a leading independent global alternative asset management group, announces its trading statement for the quarter ended 30 June 2011.

Highlights:

  • Positive performance by our market neutral and multi-asset strategies during the quarter, outperforming their benchmarks.
  • Total fee earning assets for the group increased by 2.6% to USD 8.9 billion compared to USD 8.6 billion at 31 March 2011 primarily as a result of subscriptions of USD 550 million at Gottex Fund Management (GFM) and Gottex Solutions Services (GSS).
  • Gottexs flagship MN Plus product regained its high water mark in January 2011 and has accrued performance fees for 1H 2011.
  • GSS continued to grow its assets which increased 14% from USD 1.84 billion at March 2011 to USD 2.10 billion by June 2011, of which USD 1.54 billion are related to the GSS managed account platform.
  • Strong balance sheet with no debt and substantial cash reserves.
  • The company expects the 2011 Interim Results to show a small profit when reported in September (subject to final close and review).

Commenting, Joachim Gottschalk, Chairman and CEO, stated: Even though the second quarter of this year turned out to be very volatile, I am delighted that our market neutral strategies continue to generate another quarter of positive performance, which puts us well ahead of the industry benchmarks. Risk levels in financial markets have remained high, and we expect the European sovereign debt crisis to add to more volatility in coming quarters.

In terms of assets Gottex had a positive quarter with subscriptions of USD 550 million. These inflows were concentrated in our advisory mandates as well as our GSS managed account platform. We are on track to reach USD 2 billion in platform assets this year. In addition, our multi-asset endowment strategies have made good progress and have now grown to USD 150 million. On the back of strong performance since inception, we have seen growing distributor interest in this product. Even though asset flows in the industry have remained modest, I am pleased to say that we expect the company to return to profitability and that we should post a small profit for the first half of the year.

Assets
Gottexs total fee-earning assets were USD 8.86 billion at 30 June 2011, compared to USD 8.64 billion at 31 March 2011, an increase of 2.6%. This total consisted of USD 6.76 billion in assets under management (AuM) and GSS assets of USD 2.10 billion.

AuM of USD 6.76 billion were virtually unchanged when compared to USD 6.79 billion at 31 March 2011 as a result of substantial subscriptions for the quarter of USD 310 million at GFM (most of which occurred in advisory mandates) being offset by GFM client redemptions of USD 360 million. In addition there was a positive performance contribution of USD 10 million from market neutral and directional strategies offset by a negative 25 million performance in other investment products. Foreign exchange movements had a USD 50 million positive impact on GFM assets during the quarter whilst technical factors reduced GFM assets by USD 15 million.

Gottex Solutions Services continued to grow its assets at double digit rates during the quarter, growing from USD 1.84 billion by 31 March 2011 to USD 2.10 billion by 30 June 2011, an increase of 14%. USD 1.54 billion of its assets are related to its managed account platform, which is on track to achieve its 2011 target of USD 2 billion in platform assets. GSS saw subscriptions of USD 240 million, and added USD 10 million related to redemptions, FX and other factors.

Other developments
Gottexs core market neutral products have continued to generate positive performance in the second quarter and are approximately 2.5% ahead of their benchmarks. As a result, our flagship market neutral plus product has accrued performance fees during the first half of 2011. Our second largest market neutral product was 3.9% away from regaining its high water mark by the end of June 2011.

Even during the extreme volatility seen in the second quarter this year, our multi-asset endowment product posted positive performance and has generated returns of nearly 4% year to date. This excellent performance results in growing interest from distributors who want to provide their clients with access to a well-diversified absolute return product.

GSS continues its growth and now counts over 20 managers on its managed account platform covering a broad range of investment strategies. Interest in managed accounts from large investors has not diminished and should enable GSS to achieve its USD 2 billion platform target in 2011.

Outlook
Our core market neutral, multi-asset endowment and UCITS funds continue to outperform their benchmarks1) even though absolute performance has remained moderate. However, recent volatility in global financial markets has slowed the return of client asset flows to our industry. Client interest in the short term will remain affected by the uncertain market conditions, but the company remains positive about the medium term outlook and expects net asset flows to steadily improve in the coming years. In particular, the company expects two of its strategic growth initiatives, GSS and the multi-asset endowment business, to continue to grow and broaden the companys business platform going forward. In addition, Gottex believes UCITS, Asia and consolidation opportunities in the industry will offer increased potential for the company to further augment its core business and infrastructure.

The company is on track to return to profitability this year, provided our flagship market neutral plus and our multi-asset endowment products continue to generate performance fees and remain above their new high water mark levels, with the expectation to post a small profit at the 2011 Interim Results. Corporate website:Source

PD

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