GAM Holding Hit By Slump in Performance Fees

Swiss money manager GAM Holding said a slump in performance fees helped knock profits by almost a half, a fresh sign that choppy markets are making life difficult for investment managers.

GAM, which issued a profit warning in June, said performance fees for the first half of the year were just 1.2 million Swiss francs ($1.24 million), compared with 44.1 million francs a year ago. That helped push underlying profit before tax down 46% to 55 million francs.

The results were "about as poor as expected," said RBC Capital Markets analyst Peter Lenardos.

Shares fell by 10% in early trading.

The results have echoes of those from Man Group, the world's biggest listed hedge fund firm and a bellwether for the industry, last week. The group said profit from performance fees collapsed to just $8 million from $172 million, dragging down profits.

GAM, which in June announced the acquisition of Cambridge, England-based hedge fund Cantab Capital to expand into computer-driven funds, said its main unit saw clients pull out a net 5.6 billion francs during the six months. Almost half of that came out of absolute return funds, which aim to profit in all market conditions.

Assets under management fell 5% over the past six months to 113.5 billion francs.

"We cannot rely on a quick improvement in market conditions," said Chief Executive Alexander Friedman. "The turmoil we have been seeing since the second half of 2015 is likely to continue affecting clients' risk appetite, flows and assets."

Write to Laurence Fletcher at [e-mail]

(END) Dow Jones Newswires

August 03, 2016 04:55 ET (08:55 GMT)

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