GAM has said it expects to return cash to investors in its suspended £5.6bn unconstrained/absolute return bond funds (ARBF) by early September, in an update on its liquidation plans following the suspension of manager Tim Haywood in July.
GAM added it had obtained the necessary approvals to liquidate the range while also outlining plans to launch a UCITS product for investors wishing to remain invested with the team.
On 10 August, the firm announced it had decided to liquidate its suspended absolute return bond fund range on the back of high levels of redemption requests following the suspension of manager Haywood.
Haywood, who was the business unit head for GAM's CHF 11bn (£8.5bn) AUM unconstrained/absolute return bond strategy, was suspended on 31 July following an internal investigation into issues relating to his risk management procedures and record keeping, although the asset manager stressed there were not concerns regarding his honesty.
In this morning's update, the group said all fund investors will receive their proportionate interest in cash from the liquidation process. Each fund expects to be able to make the first payments in early September, returning between 74% and 87% of the Luxembourg and Irish-domiciled UCITS funds, and between 60% and 66% of the assets in the Cayman master fund and the associated Cayman and Australian feeder funds.
It added GAM's priority is to "maximise value for the fund investors throughout the liquidation process, while ensuring equal and fair treatment to all."
As the funds contain a mix of mainly liquid assets and some less liquid assets, GAM added it is "focused on ensuring balance between value maximisation with speed of liquidation". The company expects to make a further distribution for each fund before the end of September, and continue distributions in the coming months, dependent on market conditions.
It also announced it expects to offer alternative structures for investors who want to remain invested with the ARBF team; a UCITS fund is planned to launched in the coming weeks, while the group is also setting up a Cayman fund.
In a previous update, GAM said the ARBF strategies are currently being managed by investment directors Jack Flaherty and Alex McKnight, who have joint responsibility. Flaherty has been one of the co-managers of the ARBF strategy for more than six years, while McKnight has been a key member of the ARBF team for the past 11 years. They are supported by 18 other experienced investment professionals.
Group CEO Alexander S. Friedman said: "The suspension and the subsequent decision to liquidate the ARBF funds has been a difficult process, but necessary to ensure that we deliver on our principles of acting in the best interests of all fund investors and treating them equally and fairly. This does not take away from the fundamental strength of GAM as a diversified asset manager.
"We have spent the past few years restructuring GAM into a more efficient business with a less volatile earnings profile, while continuing to build out high performing, specialist strategies that are relevant for our clients. This has made GAM better positioned to weather a challenging environment, and we believe we will continue to attract clients to our platform and deliver value to our investors in the years to come."
As previously announced, the funds affected are:
• GAM Absolute Return Bond
• GAM Absolute Return Bond Defender
• GAM Absolute Return Bond Plus
• GAM Star Absolute Return Bond
• GAM Star Absolute Return Bond Defender
• GAM Star Absolute Return Plus
• GAM Star Dynamic Global Bond
• GAM Absolute Return Bond Master fund
• GAM Unconstrained Bond fund