GAM Holding Client Assets Little Changed on Weaker Dollar

GAM Holding AG, the Swiss money manager that split from Julius Baer Group Ltd. four years ago, said assets under management were little changed in the third quarter.

Client assets as of Sept. 30 were “flat,” compared with the 116.6 billion Swiss francs ($129 billion) reported at the end of June, Zurich-based GAM Holding said today in an e-mailed statement. The company had “small net outflows,” in the period, said Larissa Alghisi, a spokeswoman for the firm.

The weakening of the U.S. dollar by almost 5 percent against the Swiss franc depressed managed assets, which were otherwise helped by a rebound in market performance in the third quarter, the company said.

Client assets were “a touch below expectations,” Daniele Brupbacher, a Zurich-based analyst at UBS AG, said in a note to clients today. “Outflows in mainly lower-margin products were offset by inflows into higher-margin products.”

GAM Holding was unchanged at 17 francs at 12:41 p.m. in Swiss trading, leaving this year’s advance at 38 percent, compared with a 24 percent gain for the 107-member Bloomberg European Financial Index.

Gross Margin

GAM Holding had withdrawals from third-party managed money market funds as well as closures and redemptions of offshore funds in its private-labeling unit. That business is expected to report a gross margin of about 9 to 10 basis points this year, according to Alghisi. A basis point is one hundredth of a percentage point.

The gross margin at its more profitable investment management unit was helped by inflows into single manager hedge funds. The full-year gross margin will be between 80 and 85 basis points at that unit, GAM Holding Chief Executive Officer David Solo said in August. A U.S. public pension fund added money to the alternative investments business and customers bought Julius-Baer branded equity funds.

“We expect managed assets to increase in the remainder of this year and profitability should improve as the company focuses more on its higher-margin business and keeps tighter control over costs,” said Peter Lenardos, a London-based analyst with RBC Capital Markets.

GAM Holding said it reduced the quarterly volume of shares repurchased as part of a three-year buyback initiative. The company, which began that initiative in 2011, said it will place a “stronger emphasis” on dividends, while sticking to a payout ratio of approximately 50 percent of underlying profit.