GAM Star Credit Opportunities (USD)

During the fourth quarter of 2019, financial markets enjoyed a positive trend, as reflected by the performance
of the fund. Spreads on financials’ subordinated debt tightened during
the quarter. The year ended strongly following positive developments related to trade wars and the UK general election. The fund benefited from income during the quarter, as well as from price appreciation of securities held. Despite the continued dovishness of central banks, the 10 year US treasury rate went up during the quarter. Nevertheless, our fund performed strongly demonstrating its low sensitivity to interest rates. Within this low interest rate environment,

we feel the fund is well positioned by capturing spreads of more than 300 bps. Within the legacy space, security prices continued to benefit from the positive developments linked to a number of issuers redeeming their old-style bonds. However, we feel that there significantly more upside to come. Instruments which have been issued under Basel II and Solvency I do not comply with the new regulatory framework (so-called legacy / grandfathered bonds). Over time,
these bonds are becoming inefficient. Therefore, there is a lot of optionality
in terms of issuers tendering or calling these bonds over coming quarters / years at a significant premium to current prices, as has been demonstrated by Santander, Commerzbank and Ageas. During the quarter, we also saw very strong demand for new issues. Going forward, we expect to continue receiving the high and predictable income from the companies in which we are invested, independent of market conditions. In addition, we believe that the fund should benefit from further price appreciation over the mid- /near term, as already experienced in 2019. Prices may not necessarily rise in a straight line, but given the attractive valuation levels of securities in our area, we believe that there is scope for further spread tightening.

GAM Star Credit Opportunities (EUR)

January was another strong month for the fund, despite markets ending the month weaker, following fears regarding developments of the coronavirus and
its impact on global growth. While we are closely monitoring the situation, we expect this to be credit neutral for the fund. As an indication, the strategy was up +18% during the SARS outbreak that lasted from November 2002 up until July 2003. Spreads on euro-denominated subordinated debt of financials tightenedslightly during the month and legacy bonds performed strongly. The 10-year Bund rate went down significantly at

the end of the month, following fears of the coronavirus. In this low interest rate environment, we feel the fund is well positioned by capturing spreads of more than 350 bps.

We also saw strong demand for new issues. For example, Banco Santander came with a new EUR additional tier-
1 capital contingent convertible (AT1 CoCo). Demand on the primary market exceeded the issuance size of EUR 1.5 billion by more than 6x and the bond
is already trading three points higher. Within the insurance restricted tier 1 space, Phoenix came with a USD new issue. The USD 750 million issue was more than 10x oversubscribed and the bond is trading four points higher. The bond is rated BBB- and the transaction came at attractive levels. If not called in five years, the coupon resets at the 5-year US Treasury + 4.03%.

Earnings season has begun, and we continue to observe strong operating performances and rock-solid balance sheets. For instance, banks such as Banco Santander and BBVA came with very strong results. We have seen their tier 1 common capital (CET1) ratios continue to increase, while non- performing loans (NPLs) continue to decrease.

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