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Gam suspends €9.5bn bonds boss amid probe

Swiss asset manager reportedly concerned that Tim Haywood may have made large investments in illiquid debt securities without the required due diligence and risk control reports.


Sebastian Cheek

Swiss asset manager Gam has suspended one of its investment directors after an internal investigation relating to risk management procedures, it announced today.

The investigation concerns London-based Tim Haywood, investment director and business unit head for the unconstrained/absolute return bond strategy (ARBS).

In an announcement, Gam said the investigation relates to some of Haywood’s risk management procedures and his record keeping in certain instances.

According to the Financial Times: “After Gam reviewed Mr Haywood’s portfolio it is understood to have found large investments in illiquid debt securities that were made without the necessary due diligence and risk control reports required by the asset manager.

“Gam was also concerned that Mr Haywood may have potentially breached limits on the types of investments held in the absolute return fund.”

The biography page for Haywood (pictured), who is also a board director at Gam, has been removed from the firm’s website.

Haywood joined Gam in 2009 after it acquired fixed income and foreign exchange specialist, Augustus, which he joined in 1998 from Hong Kong-based Orient Overseas International, where he was CIO.

Contingency plans

Gam said the total assets in the ARBF portfolios as at 30 June 2018 were CHF11bn (€9.5bn), with approximately CHF6.2bn of this eligible for performance fees.

In addition to these portfolios, Haywood is a named manager of CHF2.9bn in trade finance funds and the CHF653m in other fixed income portfolios.

Jack Flaherty and Alex McKnight, investment directors, have assumed joint responsibility for the ARBF and other associated portfolios, supported by 18 investment professionals.

Daniel Sheard, a co-manager of the ARBF strategy, is not involved in the day-to-day management of the ARBF portfolios but continues to manage other fixed income portfolios.

Gam group CEO Alexander Friedman said: “We take our responsibilities and controls very seriously. Having conducted the investigation with external counsel, we now intend to follow our usual internal processes and will take any further action that may be appropriate.”

Group results

The announcement comes the same day Gam published its H1 2018 results that revealed group assets under management increased 3% to CHF163.8bn (£126bn) from CHF158.7bn at 31 December 2017.

However, investment management group’s AUM remained flat at CHF84.4bn as net inflows of CHF2.6bn, mainly from fixed income, were cancelled out by negative market and FX movements of the same amount.

During the half, investors withdrew net CHF800m from Gam’s absolute return strategies. Gam said the unconstrained/absolute return bond strategy attracted net inflows, but the Gam Star Global Rates fund and the Gam Absolute Return Europe Equity fund saw redemptions following a period of weaker performance.

Friedman said: “Market conditions have become more challenging, and some clients are choosing to rebalance their portfolios as we enter the later stages of this long-running bull market. As a result, we saw a significant slowdown in net inflows in the later part of the first half of 2018. The volatile and directionless market conditions are likely to continue in the second half of this year, which may affect clients’ risk appetite and our flows.

“We may also experience client redemptions as a result of today’s separate announcement of the suspension of Tim Haywood, investment director business unit head for the unconstrained/absolute return bond strategy.”

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