GAM issues profit warning after AUM drop

GAM issues profit warning after AUM drop
(REUTERS/Arnd Wiegmann)

GAM Investments has issued a profit warning, blaming the “volatile market environment” for an expected pre-tax loss.

In an announcement today (July 18), the Swiss investment manager said it is anticipating a loss of SFr275mn (£236mn) in its half year results, compared with a profit of SFr800,000 (£685,000) in the first half of 2021.

The firm suffered a 17 per cent drop in assets under management for the half year, driven by volatility in global markets and the war in Ukraine.

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Negative market movements and foreign exchange swings accounted for 80 per cent of the fall in assets, the group said, as well as SFr1.1bn (£940mn) in net outflows in the investment management division.

The reduction in AUM has led to a non-cash impairment charge of SFr264mn (£226mn).

Chief executive officer at GAM Investments, Peter Sanderson, said clients have been exercising greater caution as a result of the market volatility.

“Despite this, we are encouraged to see improving resilience in our flows with clients allocating to a number of our high conviction active strategies designed to help them navigate this challenging environment.”

The first half of the year has impacted other asset managers’ profitability, with BlackRock last week posting a 30 per cent drop in adjusted earnings. 

Similarly to GAM, the fund manager was impacted by a reduction in assets under management, and has delayed hiring for some senior positions as a result according to the Financial Times.

GAM’s first half results will be published on August 3.