Interview with Goldman Sachs Asset Management

Following the recent landmark deVere Group-Goldman Sachs Asset Management convention held in New York, I interviewed Aizen Kusumi, an Associate at GSAM to gain a greater understanding about the special relationship our influential global organisations enjoy from the GSAM perspective.  See the transcript of our Q&A below.

How, in general terms, do you feel the relationship between the deVere Group and Goldman Sachs Asset Management benefits deVere’s advisers and, in turn, their clients?

Goldman Sachs has committed significant resources to its asset management business, developing it into a global, diversified product provider.  We offer our clients access to all major global asset classes and recognise that both segregated and mutual fund products appeal to different clients depending on their objectives.

We bring 144 years of financial experience that we believe deVere and their clients can benefit from. Goldman Sachs Asset Management (GSAM) was able to find three investment solutions to the multiple challenges that deVere clients are currently facing: market volatility, low interest rates, complex investment solutions, globalisation and time consuming efforts.  Since the beginning of 2013, GSAM have launched three multi asset portfolios that are designed to meet different investment needs and are exclusively available through deVere¹:

• A Portfolio that could help you generate income
• A Portfolio that aims for capital preservation
• A Portfolio that targets long-term growth

Combining the resources of a large global firm with the focus of a specialist boutique, GSAM’s independent investment teams offer a broad range of competitive products across asset classes, regions and the risk spectrum.  The organisation is also dedicated to risk management and risk optimisation.

¹ These portfolios are solely available via a life insurance product/QROPS product.  The life insurance provider has appointed GSAM as sub-adviser.

How does the alliance between our two companies function on a practical, day-to-day basis?

GSAM is headquartered in New York and has offices around the world. Similar to deVere, we firmly believe that investment ideas are enriched by global expertise and local insights and that proximity to clients in various regions creates strong working relationships.  Our local presence enables us to service deVere locally and in a timely matter.

Thus far we have conducted a number of conferences and training sessions for deVere advisers and their clients globally.  Therefore we continue to offer our support to deVere and their clients.

We offer deVere advisers a monthly portfolio review call with the Portfolio Manager to discuss recent portfolio performance and to share our macro overview and outlook.  We believe that this provides advisers with current insight on performance drivers and our views on recent market conditions.  This in turn, supports them when communicating to their clients.

What do you believe sets Goldman Sachs Asset Management apart from other firms in the industry?

Goldman Sachs’ 144-year reputation is built around a unique culture of teamwork, adherence to high ethical standards, and a deeply rooted commitment to long-term relationships and client service.  We are a globally-integrated asset management firm committed to delivering strong, consistent results and an outstanding client experience. As part of a global firm, with strong history and top talent, GSAM offers you associated strengths.

Adhering to Our Business Principles

GS&Co.’s 14 business principles focus all employees on the common goals we have as an organisation and help to create an atmosphere where expertise in all areas is maintained whenever possible and expanded, most importantly, for our clients.  Our business principles include the following:

• Our clients’ interests always come first
• We constantly strive to anticipate the rapidly changing needs of our clients and to develop new services to meet these needs
• We stress creativity and imagination in everything we do.  While recognising that the old way may still be the best way, we constantly strive to find a better solution to a client’s problems.  We pride ourselves on having pioneered many of the practices and techniques that have become standard in the industry
• We take great pride in the professional quality of our work.  We have an uncompromising determination to achieve excellence in everything we undertake

Our People

GSAM has managed growth by investing in the people and systems necessary to support our commitment to relationship management and client service.  GSAM invests heavily in the recruiting and hiring of the most capable and accomplished professionals in all of our business areas.

Dedicated Relationship Management and Client Service Teams

We differentiate ourselves from our competitors by the breadth and depth of our relationship management and client servicing.  We leverage both GSAM and Goldman Sachs & Co. resources to work with our clients in analysing various investment issues and opportunities.

Risk Management

Our goal is to provide our clients with cutting edge investment products, which are managed in an environment of rigorous risk management.

The deVere Group/Goldman Sachs Asset Management relationship was recently celebrated in a flagship convention in New York.  Tell us about why the event was important and what was taken from the experience from your perspective.

 We believe the convention in New York which took place in our headquarters in July was to deepen our relationship.  Meeting senior GSAM professionals to get a deeper understanding of the firm and the product solutions we provide for deVere.  Getting to know the Portfolio Managers was imperative, to gain greater insights of the underlying investments and overall portfolio.

To remain at the top of their industries, most successful organisations had to evolve to some degree in the wake of the global economic crash.  And how did GSAM respond / how are you continuing to respond to the global economic downturn that began in 2008 and the kinds of investment management solutions that are available to clients? 

We continue to monitor macro conditions and aim to manage our risk across all investments.  Risk management is viewed as an essential element of GSAM’s underlying investment philosophy and forms an integral part of our investment process.  We aim to ensure that active risk is employed intelligently, is understood, sized, diversified broadly and remains within the acceptable parameters of our portfolios.

We are considered an industry leader in the development and adoption of risk management technology.  This culture permeates the whole organisation and is considered to be one of our key competitive advantages.

Risk is measured and monitored on a daily basis on two levels: by the portfolio managers themselves who are ultimately responsible for the portfolios managed, and separately by our independent Investment Management Division (IMD) Market Risk Analysis (MRA) department.

The Portfolio Management team is responsible and accountable for all aspects in the management of the portfolio, and it is integral to their role to ensure that the portfolio is being managed as effectively as possible and conforms with your investment objectives and guidelines at all times.

The IMD MRA team computes and tracks the risk exposure in each individual portfolio compared to its benchmark and operates independently of the portfolio management team.  The IMD MRA team reports to Firmwide head of market risk who reports to the firm’s Chief Financial Officer.  IMD MRA also reports to the IMD Risk Committee at the divisional level.

Our goal is to provide our clients with cutting edge investment products, which are managed in an environment of rigorous risk management.

Economically, it’s been a turbulent five years, but there now seems to be a wider and growing sense of optimism.  What is your assessment of where the markets are now, and where they are likely to be in a year from now and beyond?

Certain core themes have provided the foundation of many investor portfolios in recent years.  In the US, for example, the Federal Reserve continued to embrace historic quantitative easing measures to provide monetary stimulus, offering few hints of any change in this stance until the economic recovery was on markedly firmer footing.  In Europe, a combination of incremental policy maker activity in response to significant sovereign indebtedness and weak economic data contributed to a somewhat bleak outlook, particularly for the periphery.  In the Growth Markets, growth had been slowing but continued to comfortably outpace the developed world.  And in Japan, the burden of two decades’ worth of persistent deflation, stagnant growth and growing public debt continued to plague the economy.  In reflecting upon the first half of 2013 and looking ahead to the rest of the year, a key question on investors’ minds is whether these tectonic plates that have defined the global macroeconomic landscape are now starting to shift.

Our focus is finding yield in a low interest rate environment.  We believe a diversified portfolio that is flexible and dynamic is likely to capture attractive returns going forward.

General Disclosures

THIS MATERIAL DOES NOT CONSTITUTE AN OFFER OR SOLICITATION IN ANY JURISDICTION WHERE OR TO ANY PERSON TO WHOM IT WOULD BE UNAUTHORIZED OR UNLAWFUL TO DO SO.

The views and opinions expressed are those of the speaker, for informational purposes only and do not constitute any investment advice or recommendation by Goldman Sachs.  We have relied upon and assumed (without independent verification) the accuracy and completeness of such information and neither agree nor disagree with the content herein.

There is no guarantee that these objectives will be met.

Confidentiality

No part of this material may, without GSAM’s prior written consent, be (i) copied, photocopied or duplicated in any form, by any means, or (ii) distributed to any person that is not an employee, officer, director, or authorized agent of the recipient.

© 2013 Goldman Sachs.  All rights reserved.

Compliance Code: 107626.OTHER.MED.OTU

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