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GAM Trading II Inc Fund

Global Asset Management (GAM), manages US$51.4 billion globally, is among the oldest and most established alternative fund investment houses in the world.

Founded in 1983 by the late Gilber de Botton (passed away in August 2000), is said to be the founder of the ‘open architecture’ asset-management model. GAM is best known for pioneering the multi-manager concept in 1980s. The firm currently offers funds of hedge funds, single-manager funds and managed portfolios.

In 1999, Botton sold GAM to UBS AG, which owned it until end-2005 when the fund house was acquired by another Swiss private bank Julius Baer. In September 2009, Julius Baer completed the separation of its private-banking and asset-management businesses, resulting in the independent listing of GAM Holding AG, the parent company of GAM, on the Swiss stock exchange.

GAM Holding AG which owns GAM as well as Swiss & Global Asset Management (which sells Julius Baer-branded funds) reported that client assets rose 4.8% in 1Q2010 to CHF119.1 billion (S$145.27 billion) from CHF113.6 billion as at end of December 2009.

David Lam, GAM’s Asia-Pacific managing director, said its flagship fund – GAM Trading II Inc has ‘never lost money from 1997 until now’. Trading II Inc is a multi-strategy, multi-style fund of hedge funds that has achieved positive returns every year since its inception.

During the Russian debt crisis (in 1998) – which brought down the infamous hedge fund Long-Term Capital management , the whole market tanked but it performed. Then there was the tech bubble burst, which caused the entire market to slump 50% in 3 years from 2000 to 2002, however, the fund ended 3 years with more than 40% return. In 2008, when many hedge fund turned in negative returns, GAM Trading II Inc delivered gains of 5.78%.

According to Lam, the objective of GAM Trading II fund, which uses 41 underlying hedge-fund manages (as at end-1Q 2010) is not to take big bets but to achieve stable absolute returns. The strategy for the fund is to deliver 8% to 12% returns in three to five-year cycle with low volatility. Since its inception, GAM Trading II Inc, which has assets of about US$2 billion, has achieved an annual return of about 9% with one-third of the MSCI Word Index’s volatility.