GAM hit as clients shun high-risk assets

GAM Holding’s full-year net profit tumbled 60 per cent as clients pulled money from hedge funds in favour of safer lower-margin products, the Swiss-listed asset manager said yesterday.

Net new money rose to Sfr414m (£256.7m), GAM said after Sfr2bn of client money flowed into the group in the second half, though this was mainly into lower-margin fixed income, currency and commodity products.

Assets under management at the group, which split from Julius Baer in October, rose 15 per cent to Sfr114bn as markets recovered in 2009.

GAM, which posted a net profit of Sfr149.6m for the year, would not pay a dividend for 2009, but will target a payout ratio of over 50 per cent in the future, it said. Fees earned by the GAM fund of hedge funds unit have slumped since 2008, when assets shrank by about Sfr40bn as clients fled to safer, lower-margin cash and government bonds.

Once a highly profitable fund-of-hedge-funds company, GAM was bought by UBS in 1999 and sold to Julius Baer in 2005. GAM Holding, comprising GAM and the retail product unit Swiss and Global (S&G) began trading separately from Baer last year.