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Top marks for Goldman Sachs

GSAM's boutique structure provides a potential model for other asset managers.

Recent research from Morgan Stanley described Goldman Sachs Asset Management (GSAM) as “the hidden jewel” in the investment bank’s crown. The report notes: “From much investor doubt five years ago about why Goldman Sachs was even in asset management, we believe GSAM’s success today should be unquestioned.” GSAM, it appears, is the new golden child in institutional asset management.

There’s so much to admire, it seems, that Barclays Global Investors is modelling itself on the company [see Fund champions go head to head, this issue]. “It’s hardly surprising that other firms want to emulate GSAM,” says a senior executive at a US fund manager. “They’re running an active business properly, have succeeded in hedge funds and performance is good.”

GSAM is not among the top 10 managers by assets under management – it has almost $500 billion, $110 billion of which is in Europe. But growth in assets and profitability is impressive. The asset base has grown at a compound annual rate of about 25.4% during the past 10 years, and pre-tax profit margins run at about 30% to 32%. Furthermore, Morgan Stanley’s research says GSAM is well positioned to outgrow the industry based on its diverse product offerings.

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