GAM has bought a specialist bond boutique that runs a strategy that hasn't experienced a negative year since launch in 2002, as the group diversifies into asset-backed securities.
GAM’s deal to acquire Singleterry Mansley Asset Management, and its founders Gary Singleterry and Tom Mansley, is expected to complete later this month.
Singleterry Mansley currently manages £236 million and specialises in collateralised mortgage obligations and asset-backed securities.
The team’s flagship strategy, which uses no leverage, has generated net annualised returns of 13.7% from inception in October 2002 to the end of April 2014, with positive returns in every calendar year – surviving even the US housing and financial market crash in 2007-08.
GAM intends to launch a Ucits fund based on their strategy in the third quarter of 2014, while Singleterry and Mansley will also contribute to GAM’s existing £10 billion unconstrained and absolute return bond funds.
‘Gary Singleterry and Tom Mansley are enormously experienced and successful investors,’ commented GAM’s group chief executive David Solo.
‘Their ability to navigate the severe market stress in 2007-08 and produce strong positive returns speaks for itself. In particular, they share our group’s commitment to a disciplined investment process based on deep analysis, combined with unconventional thinking.’
Mansley added: ‘The US market for mortgage-backed securities has been in a slow recovery mode over the past six years. Housing prices have improved, but remain affordable and mortgage underwriting standards became much stricter.
‘The dominance of government-guaranteed issuance allows us to invest in a diverse universe of structured securities, and while private residential mortgage-backed securities issuance remains subdued, the secondary market for non-agency debt is highly attractive.
‘Overall, this asset class offers interesting return opportunities and we look forward to making them accessible to a new and broader set of investors around the world.'