Back in February 2018, Goldman Sachs’ Securities Division, announced that it was partnering with Amundi with regards to its Luxembourgish funds based on the bank’s proprietary systematic strategy suite as well as to help support and expand its alternative UCITS offering. Amundi will take on the role as management company of the whole fund range and in addition become the investment manager for the proprietary systematic UCITS and SIF platforms.
Much was made of the announcement, with some in the media looking for ulterior motives; was this a regulatory response of some sort? Was this a sign that Goldman Sachs had lost confidence in the alternative UCITS fund arena?
Not in the slightest. In fact, the decision to partner with Amundi, Europe’s largest asset manager with an estimated EUR1.4 trillion in AUM, was a sign of intent. A way to redouble its efforts by allowing an independent management company to oversee the growth of the platform – which in total includes two UCITS umbrella structures and one SIF umbrella – with the highest level of governance and independent scrutiny.
“The decision was based on us wanting to achieve a couple of things with the platform,” explains Ben O’Bryan (pictured), Executive Director at Goldman Sachs. “First, to reinforce the governance framework of the platform. Second, to standardise our systematic products, which are predominantly swap-based funds tracking our own indices. We wanted to appoint an independent investment manager to handle all of the passive investment management activities.”
The first phase of the transition has now been completed with O’Bryan confirming that Amundi took over as the investment manager to one of the UCITS umbrellas (Structured Investments) on 10th September, where they manage in the region of USD2.2 billion in AUM.
The second UCITS platform, which offers investors access to both alternative fund managers and externally managed funds accessing Goldman’s risk premia products, will remain under the purview of Goldman Sachs Fund Solutions.
By the end of the transition phase, Amundi will act as the management company to three umbrellas. Amundi already acts as the management company to over 300 Luxembourg sub-funds (UCITS and AIFs) with assets totaling EUR144 billion. The decision to appoint Amundi as the investment manager to its internal systematic fund strategies was made so as to combine Goldman Sachs’ own product expertise with Amundi’s scale and experience.
O’Bryan hopes that the strength of this partnership will counter any lingering concerns that Goldman Sachs may be considering a similar exit from the UCITS funds sector as some of its competitors. “We are committed to the alternative UCITS space,” he says.
“We are very excited about this partnership with Amundi,” comments Camilla Haux, Executive Director at Goldman Sachs. “This is in no way a de-prioritisation of our platform. In fact, it is a way to enhance what we would like to do.
“We are in expansion mode and plan to grow the platform and launch more products. It is a key area of focus for us because it allows us to further diversify our client base. The Securities Division has made a very clear commitment to the funds’ business.”
In the next 6 months, the intention is to launch several new UCITS products, with strategies ranging from systematic long-only, passive and managed alternative risk premia to new hedge fund collaborations.
O’Bryan thinks that having the partnership with Amundi, as a management company to UCITS funds, will be helpful “in terms of providing the oversight of our fund range”.
“On the investment management side,” says O’Bryan, “it will provide opportunities to increasingly deliver on our own ideas and bring systematic strategies to the market in a fund format. I have no doubt that having a capable and experienced investment manager will help with this.”
Haux says that Goldman Sachs continues to be opportunistic in building out the product pipeline. The group is open and willing to work with hedge fund managers that it believes can add value to the platform.
“We receive a lot of requests from hedge fund managers gauging our interest in launching UCITS funds but we are selective. We don’t want too many of one type of manager or product.
“There is always demand for good hedge fund and alternative risk premia strategies, especially uncorrelated ones that can diversify a traditional portfolio. The focus is therefore on finding strategies that are complementary to those already on the platform and that fit with institutional investor demand.
“We see this partnership with Amundi as a way to build a bigger, stronger platform, especially with their expertise of being a management company, their passive investment management skills and their analysis of strategies,” outlines Haux.
Goldman’s role as the platform arranger and global distributor, with respect to the Third Party Manager (UCITS) umbrella, will not change in this new partnership with Amundi. The team will continue to bring forth external hedge fund managers to grow the overall universe of funds being offered to investors, but in its role as the management company, Amundi will perform detailed due diligence and ongoing oversight of each manager.
“All systematic as well as active products will have to go through the Amundi due diligence process when coming on to our platform,” says O’Bryan. “They are highly experienced alternative strategies selectors in their own right and we will leverage that expertise in terms of operational due diligence, making sure strategies comply with UCITS rules and so on.”
Goldman Sachs hopes to build an even stronger array of UCITS and other fund products, both passive and active, over the coming years, in this new strategic alliance with Amundi.
“It is a critical relationship for us and extremely important for our investors. They know that someone independent and very capable is looking after their interests and their capital. It’s a big exercise to make this transition and not something we’ve taken lightly,” concludes O’Bryan.
