3 Mar 2011
Fund manager GAM has reported assets under management of CHF 23.5 billion ($25.3 billion) in hedge fund, absolute return and multi-manager funds at Dec 31, 2010. Rising demand for hedge fund and absolute return strategies, fuelled by rising demand for onshore funds, including UCITS III vehicles, offset a decline in demand for multi-manager offerings. Total assets for the firm rose 4% to CHF 117.8 billion
Strong contributors to net new money inflows included GAM’s single manager absolute return UCITS III products, which benefitted from the ongoing shift in private client demand away from the historically dominant offshore structures towards investments that are regulated, liquid and offer a more favourable tax treatment. GAM said it has been dedicating its skills and experience in selecting investment talent to the permanent expansion of its range of onshore funds, drawing on both in-house and external managers. The firm’s expanding suite of alternative and absolute return UCITS III products is thought to give it a market share of around 10%.
GAM expects the trend towards onshore investing to continue in 2011 and beyond. However, in contrast to private clients, institutional investors continue to demonstrate strong interest in funds of hedge funds and are set to become the largest client group in GAM’s multi-manager business. Citing its proven risk and liquidity management, GAM said it achieved considerable mandate wins in the institutional segment in 2010 – especially for alternative strategies with a low correlation to equity markets – and has established a solid pipeline of business for 2011.
Adjusted for non-cash items3, underlying net profit for 2010 was CHF 202.2 million, up 35% from CHF 149.6 million in 2009, driven by a substantial increase in revenues. Reported on the same basis, earnings per share rose to CHF 1.03 (43% higher than in 2009) and return on tangible equity reached 19.0% (12.2% in 2009). The Group’s operating income for 2010 was CHF 712.5 million, up 21% compared to 2009. Net fee and commission income, which represents 80% of total operating income, rose on the back of asset growth.
“Our first full year of independence was marked by solid results,” said chairman and CEO Johannes A. de Gier. “This underscores the growth potential offered by our business model, and I am very pleased with the accomplishments of our operating businesses.”
Strong contributors to net new money inflows included GAM’s single manager absolute return UCITS III products, which benefitted from the ongoing shift in private client demand away from the historically dominant offshore structures towards investments that are regulated, liquid and offer a more favourable tax treatment. GAM said it has been dedicating its skills and experience in selecting investment talent to the permanent expansion of its range of onshore funds, drawing on both in-house and external managers. The firm’s expanding suite of alternative and absolute return UCITS III products is thought to give it a market share of around 10%.
GAM expects the trend towards onshore investing to continue in 2011 and beyond. However, in contrast to private clients, institutional investors continue to demonstrate strong interest in funds of hedge funds and are set to become the largest client group in GAM’s multi-manager business. Citing its proven risk and liquidity management, GAM said it achieved considerable mandate wins in the institutional segment in 2010 – especially for alternative strategies with a low correlation to equity markets – and has established a solid pipeline of business for 2011.
Adjusted for non-cash items3, underlying net profit for 2010 was CHF 202.2 million, up 35% from CHF 149.6 million in 2009, driven by a substantial increase in revenues. Reported on the same basis, earnings per share rose to CHF 1.03 (43% higher than in 2009) and return on tangible equity reached 19.0% (12.2% in 2009). The Group’s operating income for 2010 was CHF 712.5 million, up 21% compared to 2009. Net fee and commission income, which represents 80% of total operating income, rose on the back of asset growth.
“Market flows indicate that investors are tentatively recovering their interest in equities and hedge funds,” de Gier said. “However, sentiment remains fragile due to persisting macroeconomic uncertainty and it is therefore too early to say whether this encouraging trend will be sustained for the rest of 2011. In addition, the strengthening of the Swiss franc against other currencies that make up a large part of our asset base will impact our revenues going forward and creates a hurdle that we must overcome as part of our business operations.”
