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GAM braces for CHF 380m hit

As inflows return to its investment business for the first time in two years


Kristen McGachey

Gam is set to report an annual net loss after taking a one-off £315m hit linked to past M&A deals, but the fund group is striking a positive tone as it sees inflows return to its investment arm for the first time in a couple of years. 

The Swiss manager forecast an IFRS net loss of CHF 380m (£315m) for 2020, up from CHF 3.5m in 2019, thanks toCHF 377.7m impairment charge recorded in the first half of the year.

The charge concerns legacy goodwill created from its acquisition by UBS in 1999 and Julius Baer in 2005. 

Overall, the Zurich-based fund group expects to swing to a pre-tax loss of CHF 15m for the year compared to CHF 10.5m underlying profit in 2019.  

First quarter of positive flows since 2018

The projected losses come as Gam records its first quarter of positive inflows since the start of 2018. 

In Q4 the firm reported CHF 300m of net inflows into its investment management business on top of CHF 2.1bn from positive market and FX movements. 

This more than offset the CHF 400m worth of divestments over the period and marks a significant turning point for Gam which has been struggling to stem outflows after a scandal involving one of its star managers, Tim Haywood. 

Gam was pummelled by CHF 8.5bn worth of redemptions over the first six months of 2020 amid the volatile markets brought on by the Covid crisis. Over the period assets in its investment arm dropped by over a quarter to CHF 35.5bn. 

At the end of December, Gam said AUM in its investment arm had risen modestly to CHF 35.9bn, while total assets under its Private Labelling business were at CHF 86.1bn after being hit by CHF 3.4bn in net outflows which the firm said was driven by one client. 

Group chief executive Peter Sanderson said: “Gam has continued to make strong progress on our strategic plans despite the very challenging conditions of 2020. I am pleased to see this bear fruit with positive momentum in our investment management business during the fourth quarter.”

Gam will release its full-year results on 18 February.

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