Impairment charge sends GAM further into the red – but Swiss manager sees investment flows rise in Q4

Peter Sanderson, GAM

Switzerland-headquartered global asset manager GAM, which is home to Cambridge-based quantitative hedge fund unit GAM Systematic, is set to post a CHF380 million (USD426.4 million) loss in its full-year 2020 results published next month.

The loss stems mainly from a CHF377.7 million impairment charge announced in its first half results published last August, which relates to legacy goodwill resulting from the acquisition of GAM by Julius Baer in 2005 and UBS in 1999.

GAM will also report an underlying loss before tax of around CHF15 million (USD16.8 million), compared to a CHF10.5 million (USD11.7 million) underlying profit for the full year 2019, the group said on Monday morning.

The fall comes after GAM lost CHF3.5 million for the full year in 2019.

However, the Zurich-based firm - which will announce its 2020 full-year results on 18 February - generated investment management inflows of some CHF300 million (USD336.7 million) during the fourth quarter – its first quarter of positive net inflows since early 2018.

Investment management also recorded positive net market and FX movements of CHF2.1 billion in Q4, as well as an impact from divestments of CHF400 million. In private labelling GAM saw net outflows of CHF3.4 billion, which offset the positive net market and FX impact of CHF3 billion.

In the first half of 2020, GAM Systematic - which runs a range of quantitative hedge fund and long-only investment strategies spanning equities, debt and multi-asset classes – saw assets shrink from CHF4.4 billion to CHF2.8 billion, as investors pulled out CHF900 million.

The unit, formerly known as Cantab Capital Partners, has also reportedly suffered sharp trading losses in a number of its funds over the course of last year.

The Zurich-based group’s total assets under management now stand at around CHF122 billion (USD137 billion), including CHF35.9 billion in investment management and CHF86.1 billion in private labeling.

“GAM has continued to make strong progress on our strategic plans despite the very challenging conditions of 2020,” Group CEO Peter Sanderson said in a statement, pointing to “positive momentum” in its investment management business in Q4.