(Bloomberg) — GAM Holding AG, the Swiss asset manager reorganizing under Chief Executive Officer Alex Friedman, said first-half profit fell 34% after fees based on the performance of its investment funds plunged. The shares slumped.

Net income decreased to 53.3 million Swiss francs ($55 million) from 80.9 million francs a year earlier, the Zurich-based firm said in a statement on Wednesday. Clients withdrew 5.6 billion francs from GAM's investment-management business to reduce risk in turbulent markets.

The shares fell as much as 11.5%, the most since June 27, and they were trading at 9.46 francs at 9:33 a.m in Zurich.

"Results are poor, as anticipated, and show material declines and large net outflows," Peter Lenardos, an analyst at RBC Capital Markets with a sector perform rating on the shares, said in a note to clients. Pending acquisitions including systematic fund manager Cantab Capital Partners "will add much needed assets under management, diversification and earnings."

Active asset managers such as GAM are facing higher regulatory costs and the growing popularity of low-cost ETFs that passively track markets. Friedman has reduced operating costs, terminated certain investment strategies and acquired fund-management businesses since he joined GAM from UBS Group AG almost two years ago.

Net fee and commission income slid 23% as GAM made just 1.2 million francs in performance fees, compared with 44.1 million francs a year earlier. The company's expenses declined 11% during the first half, partially mitigating the drop in revenue.

Clients withdrew 2.6 billion francs from GAM's absolute return investment strategies, while risk aversion and negative investor sentiment prompted outflows of 1.6 billion francs from funds that own Chinese and Japanese equities and technology stocks, according to the statement.

"The turmoil we have been seeing since the second half of 2015 is likely to continue affecting clients' risk appetite, flows and assets," Friedman said in the statement. "Despite disappointing earnings in the first half of this year, we are investing in the future and managing the business for the long run."

Shares in GAM had lost about 36% this year prior to the start of trading on Wednesday, compared with a 14% drop in the BI Global Large Investment Management Competitive Peer Group, an equal-weighted basket of peers. The company warned in June that profit would probably fall by half in the first six months of the year. The shares have fallen about 47% since Friedman took over almost two years ago.

GAM said it made progress in July on developing new investment strategies in European real estate debt and trade finance. It previously said it agreed to acquire U.K. equities firm Taube Hodson Stonex Partner in May and Cantab in June.

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