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Alternative Market Briefing

GAM gates redemptions from its absolute return bond strategy following manager suspension

Thursday, August 02, 2018

Bailey McCann, Opalesque New York:

Swiss investment manager GAM said today that all subscriptions and redemptions in its unconstrained/absolute return bond funds (ARBF) have been suspended as of 31 July 2018. The gating comes as investors have started rushing for the exits following the removal of star manager Tim Haywood.

The gated funds represent CHF 7.3 billion in assets under management.

GAM suspended Haywood earlier this week citing risk management concerns resulting from an internal investigation, but didn't provide much detail. Haywood is not personally implicated beyond what appears to be a failure to follow internal procedure. Investment directors Jack Flaherty and Alex McKnight have assumed joint responsibility for the strategy in the interim. GAM shares dropped on the news.

On Tuesday, GAM reported a 62% decline in net profit for the first half of 2018, alongside a gloomy outlook for the second half of the year. The performance drop is partially related to a significant loss the firm took over its acquisition of hedge fund Cantab in 2016. Cantab's funds and AUM missed their targets prompting an impairment charge.

"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 invest......................

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