Announcement is latest move since the manager suspended the unit head July 31
GAM Investments will begin the liquidation process for 7.3 billion Swiss francs ($7.3 billion) in unconstrained/absolute-return bond fund assets in early September.
An update by the money manager, which runs a total 163.8 billion francs in assets, said it has obtained the necessary approvals to start the liquidation process for its suspended strategies.
All investors in the strategies will receive their proportionate interest in cash, although assets will be returned over different periods of time. The update said between 74% and 87% of assets in the Luxembourg and Ireland-domiciled undertakings for collective investment in transferable securities strategies should be made in the first payments in early September; between 60% and 66% of the assets in the firm's Cayman master fund and associated Cayman and Australian feeder strategies should be returned in the same period. A spokeswoman said exact assets under management in each of the relevant strategies is not being disclosed, but said the majority of assets are in the UCITS funds.
"GAM's priority is to maximize value for the fund investors throughout the liquidation process, while ensuring equal and fair treatment to all," said the update. "Because these funds have a mix of mainly liquid assets and some less liquid assets, GAM is focused on ensuring balance between value maximization with speed of liquidation."
A further distribution for each strategy is expected to be made before the end of September, with further distributions in the coming months "dependent on market conditions."
Investors who wish to remain invested with the absolute-return bond fund team may be able to do so under alternative structures. GAM said a new UCITS strategy is expected in the coming weeks, and a new Cayman strategy is also being set up.
The decision to liquidate the strategies followed the suspension of Tim Haywood, investment director business unit head for the unconstrained/absolute-return bond strategy, after an internal investigation involving external counsel, announced July 31. In the days that followed, GAM said the investigation concluded that Mr. Haywood may have failed to conduct or show sufficient due diligence on some investments or make accessible internal record of documents relating to these investments; that he may have breached the firm's signatory policy, signing certain contracts alone where two signatures were required; breaching GAM's company gift and entertainment policy; and using his personal email for work purposes.
Following news of his suspension, GAM received redemption requests in excess of 10% of the relevant strategies' assets, and trading was also suspended effective July 31. The relevant fund boards decided Aug. 10 to liquidate the strategies.
"The suspension and the subsequent decision to liquidate the ARBF funds has been a difficult process, but necessary to ensure that we deliver on our principles of acting in the best interests of all fund investors and treating them equally and fairly," said Alexander S. Friedman, group CEO, in a statement accompanying the update. "This does not take away from the fundamental strength of GAM as a diversified asset manager."
Added Mr. Friedman: "We have spent the past few years restructuring GAM into a more efficient business with a less volatile earnings profile, while continuing to build out high-performing, specialist strategies that are relevant for our clients. This has made GAM better positioned to weather a challenging environment, and we believe we will continue to attract clients to our platform and deliver value to our investors in the years to come."