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Thursday, July 17, 2014

Three Things Drove Goldman's 2Q Asset Growth

Reported by Tommy Fernandez

Rising tides, including stock prices and fear over interest rates, raised all asset management boats, as did Goldman Sachs.

For the second quarter of 2014, Goldman company-wide reported net revenues of $9.13 billion and net earnings of $2.04 billion. It reported diluted earnings of $4.10 per share compared to $3.70 per share.

For the investment management division, net revenues were $1.44 billion, up 8 percent from a year ago, and largely the result of higher fees.

Assets under management reached $1.007 trillion, up 19 percent from a year ago. Equity assets were up 34 percent from a year ago to $231 billion and fixed income was up 25 percent to $516 billion.

Alternatives were up 3 percent to $147 billion.

Chief financial officer and executive vice president Harvey Schwartz described three themes that helped drive Goldman's asset growth in the company's analyst conference, of which SeekingAlpha has provided a transcript.

These themes were:
1. Increasing client concern about interest rates generated growing demand for unconstrained fixed income strategies
2. Increasing appetite for incremental yield and uncorrelated returns drove flows into yield-focused strategies, as well as liquid alts.
3. Goldman has been working to bulk up in the DC I-O space, gradually growing product offerings in the space. To that end, Goldman purchased in September 2013 the stable value business of Deutsche Asset & Wealth Management, which contributed to $11 billion of inflows this quarter.

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