Goldman Sachs Asset Management
is the subject of an unflattering cover story
in Bloomberg Markets'
March issue. The article, titled Lloyd Blankfein's Headache
, covers a lot of ground, including GSAM's separate accounts, hedge funds and mutual funds, and the constant turnover at the top ranks of the asset manager.
Bloomberg Markets reporter Richard Teitelbaum writes that "evidence shows that the behemoth inside the 141-year-old investment bank is generating subpar returns for investors and is a persistent headache for Chairman and Chief Executive Officer Lloyd Blankfein."
On the mutual fund side, Teitelbaum cites Morningstar data which show that only 44.9 percent of GSAM's U.S. diversified stock funds outperformed their peer average over the three years ended December 31.
And just 34.7 percent of those funds outpaced their peer average over five years and 28.3 percent over a decade.
As for the foreign stock funds, just 11.5 percent of Goldman funds beat their peer average over three years, 6.7 percent over five years and zero percent over 10 years.
"With just a few exceptions, these funds are chronic underperformers," Morningstar mutual fund analyst Karin Anderson was quoted in the article as saying.
A GSAM spokeswoman told Bloomberg Markets that Goldman's own research making use of Morningstar data shows that the company's mutual funds did considerably
better in some categories, though they still trailed their peers.
Despite the less-than-stellar numbers, however, investors have poured in tens of billions of dollars to GSAM since 2000, according to the article.
This, according to Anton Schutz
, founder of Rochester, New York-based asset manager Mendon Capital Advisors Corp., "has turned out to be a tribute to the firm's marketing muscle."
Teitelbaum also spoke to author William Cohan, who is working on a book on Goldman that is slated for publication this year. Summing up GSAM's status within
Goldman, he said: "GSAM has always been the stepchild at Goldman Sachs. It’s never been as sexy as investment banking, trading and private equity.”
Armie Margaret Lee
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