2005 Annual Report Julius Baer Holding Ltd. - GAM Holding AG

Asset Management
22
Asset Management
Asset Management can look back on
another profitable financial year marked
by robust growth. The strong doubledigit
increase in new money inflows is
attributable to all business areas within
the division. The International Equity
Fund in the USA and its follow-up product
remained highly attractive to
investors. Just as successful were the
activities in the fixed income hedge
funds area as well as the fund and mandate
business in continental Europe
thanks to innovative, strong-performing
new and existing products.
The acquisition of specialized asset
manager GAM from UBS caused assets
under management to increase by CHF
71 billion at the time of purchase. Total
assets climbed to CHF 182 billion as a
result of high net new money inflows
(NNM) of CHF 18 billion and good
investment performance of approximately
CHF 20 billion.
Assets managed in investment funds of
Julius Baer Asset Management and GAM
as well as in private label funds totaled
CHF 118 billion at the end of 2005
(NNM CHF 13.4 billion, performance
CHF 12.3 billion). The very successful
fund category International Equity in the
USA accounted for CHF 6.8 billion of the
new money inflows all by itself. The volume
of the two funds came to CHF 23
billion at the end of 2005.
Group-wide, Asset Management managed
CHF 63.3 billion on a mandate
basis (NNM CHF 4.2 billion, performance
CHF 7.5 billion). CHF 21 billion of
this sum related to institutional mandates
in the USA (NNM CHF 5.1 billion,
performance CHF 4.9 billion), which
invest in international equities similarly
to both funds, but on an individual basis.
The securities held within Baer Custodian
Service, which are not counted in
the figure for assets under management,
rose by 21% to CHF 47.4 billion and primarily
reflect the service-based success
with institutional investors from Switzerland.
Thanks to the sharply higher average
assets under management, operating
income increased by 89% to CHF 695
million including the December results
of GAM. When viewing this increase, it is
important to consider that it includes
performance fees of certain investment
funds, from both Julius Baer and GAM,
which are collected only at the end of
the year. Operating expenses were up
by 98% to CHF 464 million, largely due
to higher performance-based compensation
in the USA and London as well as
ongoing expansion of business operations
at those locations. Included in
these expenses are integration costs of
CHF 23 million. All in all, Asset Management’s
net profit before taxes rose by
73% to CHF 231 million.