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Money Management

GAM records 16% drop in AUM in fourth quarter

Assets under management for GAM Holding's investment management unit fell 16% to 56.1 billion Swiss francs ($55.6 billion) in the three months ended Dec. 31, driven by net outflows, and negative market and foreign exchange movements.

For the year, assets under management fell 33.5%.

A financial update Thursday said group assets under management, which includes investment management and private labeling businesses, fell 9.5% for the quarter and 16.7% for the year, to 132.2 billion francs.

Net outflows for investment management for the quarter totaled 4.6 billion francs, compared with net outflows of 8.5 billion francs in the previous quarter and 5.4 billion francs in net inflows for the three months ended Dec. 31.

GAM said in its update that the absolute-return bond fund strategies contributed 11 billion francs to the decrease in assets under management in the second half of the year. Non-ARBF strategy net outflows amounted to 10.5 billion francs for the year and the impact of negative market and foreign exchange was 6.8 billion francs.

In July, the firm received redemption requests from investors for its ARBF strategies and had decided to liquidate the relevant strategies, after it suspended investment director and business unit head for the unconstrained/absolute-return bond strategy, Tim Haywood. Mr. Haywood was terminated for gross misconduct, the Thursday update said.

Liquidation of ARBF is expected to complete in the next few months, subject to market conditions, GAM said.

Absolute-return strategies excluding ARBF totaled 1.9 billion francs, with 2.2 billion francs in net outflows for the year. Fixed-income assets were 29.2 billion francs, with 5.4 billion in net outflows for the year; while equity assets under management totaled 8.7 billion francs, following 1.9 billion francs in net outflows for the year.

Multiasset strategies totaled 7.7 billion with 1 billion francs in net outflows; alternatives assets totaled 4.4 billion francs, with 200 million francs in net outflows for the year. Systematic strategies added 200 million francs in net inflows, totaling 4.4 billion francs as of Dec. 31

"2018 was a very challenging year for the asset management industry in general and for GAM in particular, given the difficult decisions we had to make around ARBF and the impact it has had on our results," Group CEO David Jacob said in a news release accompanying the update.

"We are repositioning GAM to build on the strong investment expertise we have in our business, with a distinct set of strategies that are relevant for client needs and a global distribution network to support our client relationships," Mr. Jacob added.