GAM Reports Quarterly Net Outflows of $3.2 Billion; Shares Dropby
Investment management unit assets hurt by weaker dollar, pound
Company expects `turbulent markets' to weigh on sentiment
GAM Holding AG dropped the most in three months after the asset manager reported net outflows of 3.1 billion Swiss francs ($3.2 billion) in the first quarter as market turbulence prompted investors to avoid risk.
Assets under management at the investment-management unit fell 7 percent to 67.3 billion francs from the end of December, hurt by a weakening dollar and pound, the Zurich-based company said in a statement on Wednesday. Group assets under management dropped 4 percent to 114.7 billion francs in that period. The company expects performance fees to fall in the first half from a year earlier as market instability continues.
Chief Executive Officer Alexander Friedman, who took over in 2014 after serving as global chief investment officer at UBS Group AG, is seeking ways to shore up earnings, hurt by the Swiss franc’s gains, which reduce the value of assets in other currencies. The company, whose shares have dropped about 17 percent this year, said it expects “turbulent market conditions” to continue to weigh on investor sentiment “in the near term.”
"The start to 2016 in financial markets has been highly turbulent, leading to risk aversion among investors and affecting industrywide flows,” Friedman said in the statement. “This created a challenging backdrop for a number of our investment strategies.”
The shares dropped 4.3 percent to 13.25 francs at 9:30 a.m. in Zurich. They fell as much as 6.5 percent, the biggest intraday decline since Jan. 15.