Goldman executive says retail rush into private assets is raising risks
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A rush of retail money into private assets is pressuring fund managers to deploy capital quickly and risk buying bad assets, the head of Goldman Sachs’ money management business has warned.
So-called evergreen funds, which offer long-term investments in private companies, have been particularly popular with this category of investors, as opposed to institutional investors such as pensions funds, because they allow retail investors to deposit and withdraw cash at regular intervals.
Speaking at the FT’s Future of Asset Management conference, Goldman’s Marc Nachmann said the need for these funds to deliver returns immediately after funds are deposited risked created poor incentives for asset managers.
“We’re hearing this about investment committees over-ruling deal teams, who turn the deal down, investment committees over-ruling them to actually do a deal because of the deployment needs,” Nachmann said.
The so-called democratisation of private assets is a new growth area for asset management but also one that industry leaders caution could bring reputational risk if not executed well.
“Collectively we have to get the communication right and the way we deploy things and actually the experience right,” Nachmann said. “We owe it to the end customer to get this right. But we also owe it to all of us to not create any accidents because if there is going to be an accident here, it’ll impact the whole industry.”
