GAM Holding asset fall limited by Swiss FX intervention
Switzerland’s central bank indirectly helped GAM Holding limit falls in its asset levels last quarter, as intervention to weaken the franc partially offset effects market falls and net redemptions had on the Swiss-headquartered group.
Many Swiss groups manage accounts in foreign currencies, but report earnings in their local tender, so fluctuations affect reported numbers.
Zurich’s move, made on 6 September to limit the franc/euro exchange rate to CHF 1.20, could not however prevent GAM Holding’s assets falling 6% in the quarter, to CHF 106.4bn.
Johannes A. de Gier, chairman and chief executive, called the prevailing investment climate “unsettling [with] overriding concerns about macro economic developments and the impact of political decisions”.
The company’s GAM unit had CHF 46.3bn by 30 September, down from CHF 50.7bn in mid-year. It attributed the decrease to both market falls and net outflows.
“Widespread risk aversion led to a sell-off of liquid assets globally, also affecting GAM’s funds. While withdrawals from wholesale channels were not concentrated in particular strategies and, on an individual level, were not significant, the overall impact was negative,” the group said.
GAM’s continued rolling out of Ucits hedge funds seems a perceptive move, as it noted inflows from institutional clients into single and multi-manager alternative strategies partially counteracted redemptions from long-only funds.
At the Swiss & Global Asset Management operations AuM fell from CHF 79.6bn to CHF 75.7bn over the quarter, mainly due to market moves. The turbulence did, however, fuel inflows for the unit’s physical precious metal funds.
GAM Holding also announced it retained tangible equity of CHF 840.2m on its balance sheet, whichi includes a 28% stake in Artio Global Investors.
However, it said the value of this holding, which is reviewed regularly,
Overall, the group delivered a muted prognosis for the rest of the year, saying net fee and commission income, and performance fees, would probably “remain subdued for the remainder of 2011”.
The tangible equity position includes the retained 28% investment in Artio Global Investors. The value of this holding is reviewed regularly, and GAM Holding cautioned that based on recent trading statements from Artio, a further reduction in the carrying value of the stake would be required.
“This would lead to a non-cash charge in fourth quarter, impacting the group’s full-year results,” it added.
GAM Holding’s full-year results are expected on 6 March.