Investors Turn Away From Goldman Alts. Products

Jun 18 2007 | 12:10pm ET

Goldman Sachs is learning the hard way that huge hedge fund inflows are not to be taken for granted.

For the first time since at least 2004, Goldman Sachs Asset Management reported no inflow for its alternative investment products. GSAM has certainly not been earning new investor dollars, as performance in the group’s alternatives products—which posted fantastic returns just two years ago—have declined precipitously both this year and last.

“There is not really much color to add; it was flat over the quarter,” Goldman CFO David Viniar told analysts, adding that the Wall Street giant is not giving up on its one-time cash cow. “We are pretty optimistic on the business, we are adding new products and I think over time you will see that grow.”

After taking in a whopping $32 billion, Goldman’s alternative products added just $2 billion in the first quarter before falling to zero in the second. The decline in both performance and inflows has hit GSAM’s bottom line, as revenues fell 13% in the six months to May 24.

Meanwhile, investors don’t seem to be giving up on the one-time “Cadillac of hedge funds,” Goldman’s Global Alpha, quite as quickly, in spite of its being in the midst of its second bad year in a row. Of its flagship, which is down about 6% this year, Viniar said there have been no “substantial” redemptions.

“People who are investing in the fund understand that it is a high-risk, very volatile fund.”


In Depth

Q&A: High Conviction, Low Correlation

Oct 30 2014 | 7:35am ET

Acadian Asset Management's numbers are big: over $70 billion in assets under management...

Lifestyle

Ex-Hedgie Steyer Gives $56M To Climate Action Super PAC

Oct 28 2014 | 9:23am ET

Retired Farallon Capital founder Tom Steyer has poured almost $56 million into his...

Guest Contributor

Hedge Funds Weather A Data Management Perfect Storm

Oct 22 2014 | 12:28pm ET

From a regulatory standpoint, nearly every development since the crisis has placed...

 

Videos

Editor's Note

    Guidelines for Guest Articles

    Oct 22 2014 | 9:46am ET

    We are always looking for guest articles from hedge fund managers and buy-side firms.

    If you are interested in submitting a contributed piece for possible publication on FINalternatives, please take a look at the specs. Read more…

 

Futures Magazine

October 2014 Cover

The yield curve and stock market response

Traders form habits quickly. Understanding these and their effects can better equip us to decipher actual market moves.

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.