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GAM Investments Gates Bond Funds After Surge of Redemption Requests
Investors began asking to pull money when the firm suspended its head of unconstrained/absolute return bond funds, GAM said.
Swiss asset management firm GAM Investmentshas suspendedredemptions and subscriptions for its unconstrained/absolute return bond funds, the company said Thursday.
Investor redemption requests reached “a high level” after GAM announced the suspension of the unit’s chief Tim Haywood earlier this week, according to the statement. GAM said it gated the funds as of Tuesday, the same day it disclosed Haywood’s suspension.
“Although the funds have the necessary liquidity to serve these requests, such actions would lead to a disproportional shift in their portfolio composition, which could compromise the interests of remaining investors,” the announcement said.
Haywood — whohas worked for the firmsince 2009 —was suspendedfollowing an internal investigation that found issues with some of his risk management and record keeping procedures, according to GAM’s July 31 statement. “The investigation has not raised concerns regarding his honesty,” the company said. “The relevant regulators are being kept informed of the matter.”
Haywood did not respond to a LinkedIn message seeking comment.
The unconstrained/absolute return bond funds that he managed held CHF 7.3 billion ($7.34 billion) in assets as of July 31, according to the announcement. GAM manages CHF 163.8 billion ($165 billion) companywide, and said no other part of its business is affected by the issues.
The Swiss firm said it will not charge management fees while fund redemptions are suspended, and raised the possibility that they would go into liquidation.
“We are working with the relevant fund boards to ensure that we maximize value and liquidity for absolute return bond fund investors, and are looking at establishing alternative structures for clients who want to remain invested with the absolute return bond fund team,” said the group’s chief executive officer Alexander Friedman in a statement.
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The funds Haywood managed will be run by investment directors Jack Flaherty and Alex McKnight. Flaherty has been a co-manager of the strategy for more than six years, while McKnight has worked on the team for the past 11 years, according to GAM.
Haywood’s future at GAM remains unclear. He remains suspended, a spokesperson confirmed by phone, and declined to comment further.