Troubled fund house Gam is set to cut its staff numbers by 16 per cent and review its pay structure as it looks to accelerate its efficiency goals in light of the coronavirus crisis.
An interim management statement, published today (April 14), showed Gam expected its employee headcount to fall from 817 in December 2019 to 680 by the end of 2020 through its ongoing efficiency efforts.
In March the asset manager completed a voluntary redundancy programme but added a targeted compulsory redundancy programme was ongoing, although it wanted to minimise its impact during the Covid-19 crisis.
Gam also reported it would review fixed compensation levels across the organisation to “ensure appropriate alignment”, particularly when it came to senior non-investment roles.
Group CEO Peter Sanderson said: “Gam remains committed to the strategy we announced in February and we have moved to accelerate the efficiency element of the strategy in order to respond directly to the pressures of the current market environment.
“Making Gam fit for the future is a clear strategic goal and in view of the current industry headwinds we are accelerating our plans in order to bring forward some of our longer term efficiency targets.”
In February Gam announced a strategy overhaul as the group management board and the chief executive ditched their bonuses for 2019.
The plans included savings of £63m by 2022, improved transparency, organic growth and an underlying pre-tax profit of nearly £80m.
As part of its efficiency acceleration, Gam announced today it would look to save at least £53m in 2020 alone — more than double the £24m it had previously planned to trim this year.
Gam’s board agreed to cut about 25 per cent from its fees but the fund house will continue to align bonuses to company performance while investment teams would keep their compensation arrangements, the update said.
Today’s announcements come as Gam reported a 26 per cent drop in assets under management — from £40bn to £30bn — within its investment management arm as investors pulled funds from every asset class over the three months to March.
In total, Gam saw net outflows of £5.4bn with the vast majority (£4.1bn) withdrawn from its fixed income products.
The fund house also suffered from £5.1bn of negative market movements due to the coronavirus crisis, which has seen markets tumble over the past few months.
Overall Gam’s group Aum dropped from £109.4bn to £92.4bn during Q1.
Mr Sanderson said: “GAM has not been immune to some of the toughest market conditions the industry has seen, and we saw our assets under management decline as a result of the Covid-19 crisis.
“We saw strong investment performance until the end of February, but this was impacted by the market environment during March. I am pleased that we are now seeing early signs of recovery, both in terms of asset flows and also in the investment performance of our funds.”
Gam’s plan for the future is a bid to move on from its troubled past few years, in which the suspension of one of its key fund managers led to a sustained period of outflows and saw the fund house’s assets under management dwindle.
In 2018 Gam liquidated a range of nine bond funds run by Tim Haywood after he was suspended amid concerns about due diligence and record keeping on the funds.
By October that year, the company's AUM had dropped by more than 10 per cent and it had seen £4bn of outflows from its fund range.
imogen.tew@ft.com
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