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GAM to liquidate absolute return bond funds following redemption requests

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Swiss asset manager GAM is to liquidate nine unconstrained and absolute return bond funds worth CHF7.3bn (€6.3bn) after dealing was suspended in the wake of a manager’s suspension.

Tim Haywood was suspended on 31 July after an internal investigation identified problems with his risk management and record keeping. Dealing in the funds was subsequently halted after a large number of investors attempted to pull out of the strategies.

In a letter to investors dated 10 August, Tim Rainsford, group head of sales and distribution, said the company had decided to liquidate the strategies, which would “allow investors the opportunity to receive proceeds in a more timely manner and ensure equal treatment”.

“It is expected that all fund shareholders will periodically receive their proportionate interest in cash as it becomes available throughout the liquidation process subject to any necessary approvals,” Rainsford wrote. “GAM is working with each of the fund boards to maximise liquidity and value for investors.”

For those investors wishing to retain exposure to the strategies, GAM said it was “working on establishing alternative structures”.

Haywood was suspended after an investigation found that he failed to demonstrate adequate due diligence regarding investments made in the strategies. In addition, GAM said Haywood “may have breached” company policy by failing to obtain two signatures on “certain contracts”. The manager also breached policy regarding gifts and entertainment, and used his personal email for work purposes.

GAM added that it had not discovered any “material client detriment” during its investigation but the situation remained “under review”.

The company also highlighted that there was “no evidence that Haywood was motivated by an improper rationale… or that there was any conflict of interest between him and clients”. 

In addition to the absolute return bond funds, Haywood also worked on trade finance portfolios worth CHF2.9bn and other fixed income strategies worth CHF653m. These were not affected by the investigation, GAM said.

Investment directors Jack Flaherty and Alex McKnight were jointly placed in charge of the absolute return bond strategy following Haywood’s suspension.

There have been no changes to the investment process and philosophy behind the funds, and no other GAM strategies were affected, the company said.

Zurich-based GAM ran CHF163.8bn in total as of 30 June, across equities, bonds, multi-asset portfolios and hedge funds.

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  • QN-2546

    Asset class: Real Estate Equity Fund (non listed).
    Asset region: Europe.
    Size: Total CHF 600m, approx. CHF 100-300m per fund investment.
    Closing date: 2019-06-28.

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