Earnings Call, Presentation
Asset Management - Goldman Sachs 2020 Investor Day
- Execution of a forward-looking strategy aims to position the business to capture asset class flows as clients reposition portfolios, driven by a design reflecting total portfolio needs and a menu of opportunities supported by over 1,200 investment professionals with broad geographic coverage.
- The firm targets $350 billion of net organic growth over the next five years, comprising $250 billion from traditional public markets (split 60% fixed income, 40% equity) and $100 billion from alternatives, with over 80% of alternative growth stemming from existing fund strategies.
- Specific alternative growth targets include $150 billion of total gross fundraising to achieve $100 billion in net AUM, facilitated by the newly created Alternative Capital Markets and Strategy Group leveraging global sales forces and investment banking.
- Revenue projections for the next five years assume a conservative 2% annual market appreciation, a stable 32 basis point weighted average fee rate, and the planned $350 billion fee-based asset growth to generate an incremental $1.6 billion in annual management fees, alongside the recognition of $1.6 billion in previously unrecognized incentive fees upon asset sales.
- Strategic shifts include migrating capital-intensive activities like private equity and growth equity into fund formats and remixing the balance sheet toward less capital-intensive credit investments, expected to release $4 billion of capital from the asset management business.
- The business model evolution aims to improve capital efficiency and ROE by offsetting lower on-balance sheet revenues with higher management fees, while supporting organic growth through strategies targeting large asset allocators and a dedicated liquidity platform for corporate treasurers.
- New product and market initiatives include a suite of 22 active beta ETFs designed to deliver alpha in a low-cost environment, external access to global special situations and growth equity strategies via new funds, and the use of the balance sheet to seed strategies like a flagship real estate fund before third-party capital raising.
- Current holdings include $75 billion in dedicated ESG assets with a commitment to embedding ESG solutions across broader client portfolios, while the global alternatives team maintains investment capabilities across industries, capital structures, and geographies.
- The long-term objective is to build a more durable and recurring business that delivers persistent performance above average to create a powerful compounding effect on the track record.