Posted inAbsolute Return

Gam freezes absolute return bond fund

The Swiss asset manager said in a statement on Thursday that trading has been suspended as of 31 July 2018 due to “high levels of redemptions”.
The affected funds contained CHF 7.3bn (€6.3bn) of assets under management on the suspension date. Gam said freezing the funds will not impact any other part of its CHF 163.8bn (€141.8bn) business.

The news comes just days after ARBF head Haywood was suspended by Gam following an internal investigation relating to risk management procedures and his record keeping in certain instances.

Gam did not disclose further details about the reason behind Haywood’s suspension but his profile was immediately removed from the firm’s website.

Haywood is also a named manager of CHF2.9bn in trade finance funds and the CHF653m in other fixed income portfolios. He is also a board director at Gam.

Atypical

Darius McDermott managing director of Chelsea Financial Services said the decision to freeze the ARBF portfolios was rare.

“We think this is a reasonable course of action, but it is not typical – this type of scenario is rare,” he said. “I would just hope that the suspension is not for too long.”

Gam reiterated on Thursday that “investment processes and risk management across the firm remain robust”.

It said it is “committed to ensuring equal treatment of all investors and protection of their interests” and is “actively engaging with clients” and is “focused on resolving the situation as quickly as possible”.

The ARBF funds have shrunk considerably within the span of a month. The portfolios contained roughly CHF11bn (£8.5bn) at the end of June, according to Gam.

Gam said in its statement on Thursday that the funds have the necessary liquidity to meet redemptions but said it had gated the funds because selling off the liquid assets “would lead to a disproportional shift in their portfolio composition, which could compromise the interests of remaining investors”.

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Kristen McGachey

Kristen joined Last Word Media and the world of financial journalism in April 2016, leaving behind a career in a legal publishing firm as a senior researcher turned assistant editor. This native Angelino...