Goldman Moves To Boost Alternatives Business

Feb 1 2008 | 12:48pm ET

Goldman Sachs has moved about half of its wildly successful principal strategies group—and half of the money they were running—into its asset management division in an effort to boost its alternative investment offerings.

The Wall Street giant last month launched its first stock-picking hedge fund, run by former proprietary trading desk chief Raanan Agus and former U.S. prop desk head Kenneth Eberts. The two took roughly 40 of their staffers with them to Goldman Sachs Investment Partners, which was one of the largest hedge fund launches in history at $7 billion. About $2 billion of that is said to be Goldman’s own money.

The move of half of its prop traders to Goldman Sachs Asset Management is part of an effort to restore the group’s flagging alternatives performance. Once exclusively the preserve of quantitative funds—most of which were badly battered by last year’s market volatility, including its flagship, Global Alpha—Goldman hopes to broaden its mandate.

Still, the decision leaves a gaping hole at Goldman: Its principal strategies group contributed almost $4 billion, or more than 8%, of the firm’s profit last year. In a regulatory filing announcing the move, Goldman said it planned to “replace the reassigned personnel and transferred assets.”

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