Gartmore hit by departure of star trader

GARTMORE’S chief executive yesterday insisted that his firm has put the sticky matter of star manager Guillaume Rambourg’s suspension and subsequent resignation behind it, despite suffering heavy outflows of investor cash over the first half of the year.

Gartmore saw its assets under management dip by 10 per cent to £19.9bn over the six months to end of June, while net new business outflows over the period stood at £1.65bn.

Chief executive Jeffrey Meyer admitted that the investigation into Rambourg’s conduct had been the primary driver behind the outflows, but said that the fallout from the affair had peaked.

“Our business was doing very well in the first quarter, when we were executing the strategy we set out at the time of our IPO,” Meyer said. “We then had to hit the reset button in April, but the issue is now behind us and we are looking forward to regaining our momentum.”

But Gartmore admitted it has seen continuing redemptions since the end of the period, with net outflows of £238m in July. £67m had been pulled from its alternative funds business as of 2 August, while the group has already received notices of £223m of redemptions on 1 September.

Gartmore posted a 35.7 per cent year-on-year increase in net revenue for the first half, to £113.2m, though pre-tax profit halved to £25.8m.

Meyer is pessimistic about an improvement in the volatile economic climate, predicting the Eurozone turmoil will shift to the US over the second half due to rising unemployment and tepid consumer spending.

But he said Gartmore would press ahead regardless with a hiring drive, aiming to poach new investment teams, particularly in the US equity long/short arena.