At the end of July, Zurich-based asset manager GAM shocked the staid world of Swiss asset management when it suspended a star bond fund manager. This came after an internal investigation found flaws with risk management and record-keeping.
The outflows that followed led GAM to bar investors from making withdrawals from its flagship absolute return bond funds. The company then liquidated the SFr7.3bn ($7.2bn) fund range.
GAM chief executive Alexander Friedman stepped down this month. The listed group’s share price has slumped 60 per cent this year, as investors pulled tens of billions of dollars from its funds. Many laid the blame at GAM’s absolute return bond fund’s investments in illiquid bonds, which has made it difficult to satisfy investors demanding their money back.
Such matters have reignited debate over the “go anywhere” bond funds that give managers a free hand to pick investments, which had already suffered a loss of favour because of poor returns. Critics say GAM was part of a wider rush to riskier and less liquid bonds.
Alan Beaney, investment director at RC Brown Investment, says GAM’s funds were “clearly buying things that were pretty illiquid”, such as…
