GAM reported an underlying pre-tax loss of 15.4 million Swiss francs ($16.2 million) during the first half of the year. While the firm managed to reduce total expenses by 9 percent during that period, that was not enough to overcome reduced performance fees, it announced Wednesday.

Today's results were in line with a profit warning GAM announced in July, saying the group expects an underlying loss before tax of approximately 15 million Swiss francs loss compared to a 0.8 million profit for the first half of 2021.

Fees Hit

GAM generated 93.5 million francs in underlying net fees and commissions during the first half compared to 127.3 million during the same period last year. It said the reduction was primarily driven by reduced performance fees which fell to 2.6 million from 17.2 million. 

Using IFRS methodology, GAM reported an underlying loss of 260.5 million for the first half. The difference between the underlying and IFRS loss mainly relates to a non-cash impairment of legacy brand value created by the acquisition of GAM by Julius Baer in 2005.

Managed Assets Decline

The firm's assets under management (AuM) fell to 82.3 billion francs at the end of June, with 27.1 billion in the investment management unit and 56.1 in fund management services. The first half figure is down from 99.9 billion at the end of last year. 

Most of the loss in AuM was attributable to a 12.4 billion negative market impact, while 700 million resulted from foreign exchange fluctuations.

The investment management unit saw net 1.1 billion in net client outflows during the first half of the year, but  «saw an improving trajectory for flows, despite the challenging market conditions,» GAM said.

Fund management services saw a 2.5 billion francs outflow of client funds, but that was mostly related to a client transferring its business to another provider, as finews.com also reported.  

The asset manager has been the subject of rumors that it is for sale, as finews.com reported, but no mention of any potential sale was made in today's announcement.

Volatile Market Outlook

GAM said it expects financial markets to remain volatile and in the face of that clients will remain cautious. Still, the firm expects its clients to continue to allocate to strategies to navigate «risks and opportunities» during a challenging time.