$6bn inflow ahead of shareholder meeting, GAM reports – 19th April 2018

GAM, the Swiss asset manager that is facing a second shareholder rebellion over how much it pays senior staff, posted net inflows of 6bn Swiss francs ($6.1bn) across its entire business during the first three months of the year.

The Zurich-headquartered fund house reported net inflows of CHF2.5bn across its investment management operations, with fixed income products responsible for the majority of new business.

The GAM Star Credit Opportunities strategy, the GAM Local Emerging Bond fund, and the GAM Star MBS Total Return fund, were the biggest contributors to fixed income flows.

However, absolute return and multi-asset funds recorded outflows during the first quarter.

The positive sales momentum helped to buoy GAM’s group assets under management to CHF162.3bn, a 2.2% increase from the end of December.

Private label funds — those which GAM oversees on behalf of other asset managers — garnered inflows of CHF3.5bn during the quarter, with the vast majority of new money coming from outside of Switzerland.

Alexander Friedman, group chief executive of GAM, said: “The good momentum we had in 2017 continued into the first quarter.

“Our investment strategies continued to deliver strong performance, our net inflows across a broad range of products were solid, and we are on track with our strategic initiatives.”

Despite strong demand across its product range during the first three months of the year, Friedman added: “Nevertheless, market volatility has increased noticeably over the last few months, which may lead clients to become more cautious.”

The positive sales momentum for GAM comes as Institutional Shareholder Services, which advises more than 1,900 large investors, recommends shareholders vote against a non-binding remuneration report at the asset manager’s annual general meeting on April 26.

In its report to GAM shareholders, ISS flagged a one-off recruitment award made to former Man Group executive Tim Rainsford, who joined the firm in January 2017 as group head of distribution, among its main concerns.

According to GAM’s annual report, Rainsford was handed a recruitment award totaling around CHF5.5m last year to replace various incentives he forfeited when he joined from Man Group, such as his cash bonus.

However, shareholders are being advised by ISS to approve the fixed and variable remuneration of its directors and executive committee, which are part of separate reports to be voted on at the AGM.

Last year shareholders voted 54.2% against GAM’s remuneration report after the pay of its CEO rose by more than 20% in 2016, even though profits fell at the fund house.

The shareholder rebellion prompted GAM to overhaul its pay framework, including a reduction in fixed pay for its CEO, the introduction of a cap on bonuses for its management board and the deferment of a larger portion of bonuses for senior executives.



David Ricketts, Financial News