Swiss asset manager GAM will have to continue belt-tightening in the wake of 2021 results, which saw assets under management decline by a fifth. Still, the firm speaks of strategic progress.
GAM reported a consolidated loss of 23.3 million Swiss francs ($25.5 million) in fiscal 2021, following an extraordinary net loss of 388.4 million in the previous year, the firm announced Thursday.
Assets under management totaled 100 billion francs at the end of 2021, down 22 francs from a year earlier. Investment Management recorded outflows of 4.4 billion francs. Fund Management saw 20.5 billion Swiss francs leave the firm, in connection with a previously announced exit by a major client, GAM wrote.
Lower Fee Margins
GAM’s pre-tax operating loss narrowed to 9.6 million francs from 14.9 million francs a year earlier, while fee and commission income decreased 2.5 percent to 227.3 million francs.
The decrease was due to lower net asset management fees and commissions on the lower level of assets under management and a slightly lower average management fee margin in Investment Management.
Higher Bonuses
The firm paid out slightly higher performance fee bonuses for 2021. Variable compensation increased 19 percent to 38.3 million francs, offset by a 5 percent decrease in operating personnel expenses to 143.1 million francs.
Wealth Management
Last year, GAM announced an increased focus on Wealth Management under new leadership.
GAM currently reports wealth management assets within investment Management the business but reports that as of 31 December 2021, GAM Wealth Management reported assets under management of 2.9 billion Swiss francs. Clients are mainly located in the UK, Switzerland and Asia.
Revised Targets
GAM also revised its financial targets in light of the business performance. The firm is now targeting an adjusted pre-tax profit of at least CHF 50 million, an adjusted operating margin of between 20 percent and 30 percent, and a compensation ratio of 45 percent to 50 percent by fiscal 2024.
