Senior GAM executives Larry Hatheway and Kier Boley explain why their firm focuses on active, high-conviction investment decisions and is proud of its “alternative perspective of the world”.
What, in brief, is GAM’s history and how does it stand now in terms of its offering and client base?
Larry: GAM was founded in 1983 by Gilbert de Botton; he really was a pioneer of fund of funds and open architecture investing, and recognised the importance of active management. It’s safe to say that we are members of the “active camp” and have employed an active investment approach for over 30 years based on true conviction investing
Furthermore, we’re renowned to this day for uncovering talented investment managers and are proud of our alternative perspective of the world. As such, we look to bring an interesting range of regulated strategies to our UK client base, which aim to deliver diverse and often uncorrelated returns to traditional asset classes.
Larry Hatheway is Group Head of GAM Investment Solutions and Group Chief Economist.
We also have a number of white-labelling arrangements in place, whereby we discover a talented manager and have them manage assets for our clients in a GAM-branded, regulated structure. Two great examples of this are: GAM Star Credit Opportunities, managed by credit boutique Atlanticomnium, and GAM Star Cat Bond, managed by catastrophe bond specialists Fermat Capital. Both funds form the core of our fixed income book and are first quartile performers since inception in 2011.
To build further on our private client heritage and UK presence, in 2012 we launched a unitised Model Portfolio Service (MPS), which has built a strong track record and gained significant traction in the UK adviser market – attracting assets of over £1bn since launch. Today, GAM is one of the UK’s leading independent asset managers with assets of £96.1bn, as at end-2016.
Who is the “typical” client of GAM, in terms of life stage and what they are trying to achieve with their wealth?
Kier: Of course, we have a diverse client base and cater for individuals at a variety of life stages. However, typical clients would tend to fall into two categories: they are generally either in the later stage of a successful life or younger entrepreneurs with significant assets built from liquidity events. The similarities between the two are that they will have assets at GAM in excess of £2m, they are invested in a bespoke, segregated account and looking to grow their wealth whilst maintaining a degree of capital protection in order to meet their particular lifestyle requirements.
Naturally, clients have varying risk-profiles and we cater for individuals across the full risk spectrum and with varying financial objectives, such as capital protection, capital appreciation, income generation or a combination of objectives.
We also cater for individual clients who are Resident Domiciled, Resident Non-Domiciled and Non-Resident, as well as for those clients coming to us through trusts and charities.
Kier Boley is Co-Head of Investment Solutions
How would you sum-up GAM’s investment ethos? Does the firm have particular expertise in any one area?
Larry: We are active investment managers in every sense of the word: we don’t attempt to replicate benchmarks, but to outperform them over the full investment cycle by making active, high-conviction investment decisions. We firmly believe that effective asset allocation combined with active management at the asset, manager and stock selection levels generates enhanced risk-adjusted returns for our clients.
We don’t specialise in a particular asset class, but rather build portfolios across global equities, fixed income (subordinated debt, insurance-linked, mortgage-backed) and alternatives (absolute return, macro trading, merger arbitrage). However, we also believe that we are well placed, given our history and experience, to deliver differentiated portfolios that don’t rely on the standard “60:40” allocation to equities and traditional bonds. We think that a number of developed government bond markets are fully valued, so it’s especially important in the current environment of rising interest rates and inflation to research and uncover compelling capital preservation assets which have low or no correlation to traditional markets.
How does GAM go about devising investment strategies and building portfolios which suit each individual client’s risk-profile and financial goals?
Kier: We seek to understand the client’s individual circumstances prior to building the portfolio, so we carry out a formal suitability and due diligence review which take full account of their risk-profile, currency, time-horizon, taxation and future cash flows. Once we have established the risk-profile and objectives, we build a bespoke, tailored solution, often across equities, fixed income and alternative managers.
Any restrictions due to tax or ethical requirements are coded into our portfolio management systems, whilst the monitoring of the portfolio, ongoing portfolio construction and relationship management is carried out by the portfolio managers dedicated to each client.
How would you describe GAM’s approach to servicing and communicating with clients?
Larry: We pride ourselves on attentive and personalised client service, so we dedicate at least two portfolio managers to each client relationship. Our ethos is defined by a focus on transparent, direct contact with clients – and to do this you need an experienced team of portfolio managers and support staff. Clients can contact at least one of their portfolio managers at any time, either by email or phone, and we always aim to respond to email queries straight away.
We strongly suggest a formal review at least once per year, but clients can come in and meet with us anytime they like.
Additionally, we provide regular valuations which include detailed portfolio analysis, performance, risk and fee information, plus a quarterly review of markets and our investment outlook.
How does GAM help clients engage more effectively with the management of their wealth? Do you help clients with investment education and research, for example?
Kier: We host a number of thematic educational events throughout the year that aim to educate clients on pertinent investment topics. Additionally, a number of our investment managers produce articles and market reviews/outlooks which are posted on our insights web portal, if not more nationally via the press.
Ultimately, I think our clients take comfort from that fact that they can call us or come in anytime and speak to one of their portfolio managers about their investments.
To help users weighing up wealth managers, how would you summarise what is distinctive about GAM?
Larry: There are a number of things that differentiate our approach from the competition, but firstly it is our experience – with over 30 years managing private client portfolios we understand that our clients have a range of objectives.
Secondly, it should be obvious by now that we are passionate about active management; we firmly believe that our clients’ success lies in us taking active, high-conviction decisions.
Thirdly, our extensive research capability is world renowned; we have been researching managers for over 25 years.
Fourthly, our power of scale allows us to access exceptional investment talent not available to smaller investors at lower cost.
Finally, we are truly committed to honest and transparent client service, and give our clients all the support they need in terms of education and direct, personal contact with the people making the decisions.
If you would like to start a conversation with GAM please get in touch with the findaWEALTHMANAGER.com team HERE.