Goldman Set to Launch Record $10 Billion Hedge Fund

Christopher Owen

18 December 2007

Goldman Sachs Investment Partners, a new stock hedge fund due to open on 1 January 2008, may launch with up to $10 billion – the biggest debut in the industry's history. Unlike previous hedge funds spawned from the New York-based company's proprietary equity desk, traders Raanan Agus and Kenneth Eberts are staying at Goldman, moving to its asset management group. The new fund is part of Goldman chief executive Lloyd Blankfein's plan to expand the firm's wealth management business in order to win more customers. If Goldman starts the fund with $10 billion, it would surpass the record set last year by Michael McCaffery, former head of Stanford University's endowment, who launched California-based Makena Capital Management with $7 billion. Goldman is selling the new fund on a proven track record and the team's ability to "leverage the Goldman Sachs brand to source and access investments", according to a marketing document obtained by Bloomberg. The fund will start with more than 40 investment professionals from Goldman's proprietary trading group. About 75 per cent of the fund will concentrate on shares they expect to rise and those they expect to fall, with another 5 per cent dedicated to companies going through mergers or other corporate events, the marketing documents said. An additional 10 per cent will be earmarked for investment in corporate credit and 10 per cent in private equity or other less liquid assets. Between a half and three-quarters of the assets will be in the US. A further 10 to 30 per cent will be focused on Asia. Goldman will put an undisclosed amount of its own money into the fund and pay the same fees as outside investors, which are 2 per cent of assets under management and 20 per cent of returns. Goldman Sachs Asset Management now has $800 billion in client assets, including about $33 billion in hedge funds as of 30 September.