GAM warns of 50% profit drop due to falling performance fees

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A dramatic fall in performance fees is expected to see GAM’s profits for the first half of 2016 drop 50 per cent compared to the previous year.

Performance fees are expected to drop 98 per cent from CHF 44.1m (£32.37m) in the first half of last year to CHF 1m in the first half of 2016.

Underlying profit before tax is expected to decline 50 per cent from CHF 101.5m in the first half of 2015 as a result. Profits after tax in the first six months of 2016 was CHF 80.9m and is expected to fall in line with pre-tax profits.

Lower average assets under management and a reduction in the average management fee margin are expected to drive down the Swiss asset manager’s management fees and commissions.

The update comes ahead of the final first half 2016 results, which will be published at the start of August.

In a statement GAM said it was controlling costs in a “disciplined manner”.

The asset manager said it continued to expand its core investment management capabilities through strategic acquisitions and the development of new products, such as trade finance, absolute return and real estate debt.

In May GAM announced it had agreed to buy UK-based global equity manager Taube Hodson Stonex.