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Gam sacks star bond manager as assets fall by a third

Troubled Swiss asset manager sacks Tim Haywood for ‘gross misconduct’ as full year results show loss of €818m


Kristen McGachey

Gam has sacked star bond manager Tim Haywood (pictured) who was at the centre of a scandal involving one of the fund group’s most popular ranges that unleashed a wave of redemptions and sent assets tumbling.

The Swiss manager confirmed Haywood’s firing as it unveiled its full year results for 2018 which painted a continuing picture of financial woes with the beleaguered manager posting a net loss of CHF 929m (€818m) and a 30% hit to assets in its investment arm.

“Following the conclusion of the investigation and the disciplinary proceedings, the suspended investment director has now been dismissed from the company for gross misconduct,” it said.

The Zurich-headquartered fund group has been relatively tight-lipped about Haywood’s status at the company in the months since his suspension was announced and his absolute return bond fund (ARBF) range entered liquidation.

Last summer Gam CEO Alexander Friedman, who was ousted from the firm months later, revealed the former head of Gam’s multi-billion-pound absolute return bond strategy was suspended for conduct issues, which concerned his due diligence and record keeping “in certain instances”. It was later revealed that the investigation into Haywood had been triggered by an internal whistleblower and Gam had been looking into the bond manager since November 2017.

ARBF blow-up weighs heavy on results

The blow-up of Gam’s €9.5bn ARBF range has continued to take its toll on Gam triggering outflows from other fund ranges and wreaking havoc on its share price.

In 2018 the firm recorded CHF 10.5bn (€9.2bn) of net outflows from non-ARBF strategies on top of the money that was lost from liquidating Haywood’s strategy. Coupled with CHF 6.8bn (€5.9bn) from negative market movements this dragged AUM down to CHF 56.1bn (€49.3bn) from CHF 84.4bn (€74.3bn) the year before.

Last year Gam saw 77% wiped off its share price, which fell to a record low of CHF 3.86 per share. Shares in the group fell 7% following the release

Gam posted a net loss of CHF 929.1m (€818m) and pre-tax profits of CHF 126.7m (€110m) last year, which it said were in line with expectations.

The group reiterated its guidance that profits for 2019 will be “materially below” last year’s given its significantly lower AUM and that no dividend will be paid to shareholders for 2018.

Restructuring update

The Swiss manager also provided an update on its restructuring efforts, that will see it eliminate 10% of the roles across the group, saying plans are now underway.

Gam expects to achieve a reduction in fixed personnel and general expenses of at least CHF 40m (€35m) by the end of 2019, with one third of the savings to be reflected in 2019 and the full benefit in 2020. It said further opportunities for cost savings would be examined during the overhaul of the business.

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