The asset manager, which was once split off from the private bank Julius Baer, is slowly struggling to survive after further losses. GAM must finally play the trump cards that the company actually has.
An employee of the asset manager GAM in Zurich’s Prime Tower.
The asset manager GAM is still unable to find a way out of the negative spiral. It was known that in 2021 there would be a loss before taxes of CHF 9.6 million. However, the annual results now show that customers also withdrew funds in the fourth quarter. Assets under management fell year-on-year in both its own-branded business and the low-margin business that GAM offers on behalf of third parties. Measured against the market valuation, GAM is only a shadow of itself at around 210 million francs.
Since 2018, GAM has been suffering from the consequences of a collaboration with Greensill Capital, which, like Credit Suisse recently, ended in a shambles. And in the low interest rate environment of 2021, clientele showed little interest in the fixed income products GAM is known for. That could change if interest rates rise.
Already in 2021, GAM reduced its workforce from 701 to 605 full-time equivalent employees, invested in a software platform and expanded its suite of equity-based investment solutions to reduce exposure to fixed income products. The asset manager must hope that this painstaking groundwork will bear fruit and that customers will return. Without new money, the reduced profit target of 50 million francs by 2024 also remains out of reach.
A lot, but not everything, is black for GAM: Some products perform well and also attract new money. However, it could be the last chance. The company has been in decline for years and is piling up losses. As hard as that sounds, nobody needs private companies that don’t make any profits in the long run.