GAM Investments has announced that all subscriptions and redemptions in its CHF7.3 billion unconstrained/absolute return bond funds (ARBF) have been suspended as of 31 July 2018, following redemption requests of over 10 per cent since the suspension of investment director Tim Haywood (pictured).
The high level of requests led to the firm using its ‘redemption gates’ – devices designed to prevent a fund’s collapse during a stress event, more usually caused by extreme market conditions.
The firm writes that although the funds have the necessary liquidity to serve these requests, the redemptions would lead to a disproportional shift in their portfolio composition, which could compromise the interests of remaining investors.
GAM’s investigation following the suspension of Haywood found that he may have failed, in GAM’s judgement, to conduct or evidence sufficient due diligence on some of the investments that were made, or make accessible internal records of documents relating to these.
The firm writes that, in addition, the investigation concluded that Haywood may have breached the firm’s signatory policy by signing alone certain contracts where two signatures were necessary. He was also found to have breached the company’s gifts and entertainment policy by not asking for required pre-approval and used his personal email for work purposes.
The company will cease charging any management fees to the funds involved while they remain suspended or if they go into liquidation.
Group CEO Alexander S Friedman says: “We are fully committed to safeguarding the interests of our clients. We are working with the relevant fund boards to ensure that we maximise value and liquidity for ARBF investors, and are looking at establishing alternative structures for clients who want to remain invested with the ARBF team. I am confident that this strong and broad team can continue to deliver the differentiated active management solutions that our clients need.”
Chairman Hugh Scott-Barrett says: “The Board of Directors acknowledges that recent events have been a setback for the company. However, we have absolute confidence in the strength of GAM as a diversified asset manager and the ability of its investment teams to deliver returns for clients. We have a clear strategy and management will continue to execute against it. The Board of Directors and the management team are committed to considering all avenues to optimise shareholder value as we continue to build on the many achievements to date.”