Goldman Sachs Asset Management, Alternative Investment Management Services, Hedge Fund Strategies: HNWI/private client FoHF provider

Winner: Best high net worth individual (HNWI)/private client fund of hedge funds provider

High net worth individuals (HNWIs) make up over a quarter (24%) of investors in the hedge fund strategies at Goldman Sachs Asset Management (GSAM), accounting for $6.5 billion of the $22 billion in total assets under management (AUM). The company designs products specifically for these wealthy clients.

"When we designed our fund of hedge funds (FoHF) mandates, we did so with HNWIs in mind," explains Kent Clark, chief investment officer of GSAM's alternative investment management services' hedge fund strategies (AIMS HFS).

For example, the $187 million GS Dynamic Alternative Strategies Portfolio (DASP) was set up with wealthy individuals in mind. A FoHF, it was set up in March 2010 to cater to clients who wanted the European Union Ucits III-compliant regulatory stamp of approval.

DSAP was structured to provide access to drivers of return not already accessible to this client group. "There was demand from the private wealth management side of the business for a Ucits III fund from a tax and liquidity perspective," says Clark.

The fund invests in a mixture of strategies, including equity long/short (38%), tactical trading (30%), relative value (21%) and event driven (11%). Managers include Brevan Howard, GAM, Highbridge, Sloane Robinson and Marshall Wace.

GSAM set up the fund to satisfy a need among wealthy clients for liquidity on a par with investment in the underlying managers. "Investors in the fund are made up entirely of private wealth management clients, some internal and some from other banks," says Clark.

"We are able to provide frequent liquidity to investors consistent with the liquidity of underlying managers," he adds.

The prestige and standing of GSAM has commended it to wealthy investors. "We believe we are the investor and partner of choice for many hedge funds, given our tenure and experience in the industry, diversified and stable capital base, Goldman Sachs network, reputation and thorough due diligence process," Clark notes.

GSAM ranks among the top 10 asset managers globally, while the company's investment teams offer a broad range of competitive products across asset classes, region and the risk spectrum. "From sourcing, performing due diligence and executing investments to raising new capital and servicing existing clients, we leverage Goldman Sachs in everything we do," says Clark.

Tactical views are informed by research and discussion with experts across the company. Personnel leaving Goldman Sach's proprietary trading desk have become some of the best-known managers in the hedge fund industry.
GSAM is able to access some of the best managers globally. The company manages over 40 customised portfolios and is also able to access closed managers because of its longstanding global relationships.

Within the company's investment management division are two major businesses: asset management and private wealth management. "As a firm we have a network of private wealth advisers spread globally," states Clark. "We work with them to help investors understand their portfolios and how a hedge fund might fit more broadly into their portfolios." The two operations have a combined staff of more than 3,000 people worldwide.

The company brings an impressive pedigree to its clients. It has been in the business of finding, evaluating and investing with leading hedge fund managers since 1969 via its acquisition of Commodities Corporation. Its early start makes Goldman Sachs one of the first multi-managers in the industry.

Today, AIMS HFS manages over $22 billion across portfolios of hedge funds, customised solutions and advisory relationships. It employs more than a hundred investment professionals, including more than forty investment and risk management staff.

Over the past decade, the company has evaluated over 5,000 funds across the hedge fund universe. It is able to leverage Goldman Sachs' global reach in 64 offices across 30 countries. "We seek to be best in class as measured by performance and client commitment," comments Clark. Over half (54%) of all investors come from the US with just under a fifth (19%) from Europe.

According to GSAM its investor base of ultra high net worth individuals and institutions has proven to be a stable pool of capital. The company's broad product platform accommodates varying investment objectives and time horizons.