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Goldman Sachs: Asset Management Is Contributing to Expansion

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Productive 3Q17

Goldman Sachs’s (GS) Investment Management segment reported 3Q17 net revenues of $1.5 billion, which was flat compared to 2Q17 but 2% higher than 3Q16. The increase was due to higher management fees, which means increased higher average assets under supervision and higher transaction revenues.

Market appreciation also led to higher assets under management, thus increasing fees. That’s an important factor that has helped asset managers in 2017. Total pre-tax earnings for the Investment Management division were $0.30 billion.

Of the $1.5 billion in revenue generated in 3Q17, management and other fees constituted ~83% of revenue at $1.3 billion. Incentive fees and transaction fees were $86 million and $168 million, respectively, in 3Q17.

Goldman Sachs is managing $1.5 trillion of assets as of September 30, 2017, a growth of $50 billion from the previous year. The increase was due to an increase in long-term net inflows of $13 billion, liquidity product net inflows of $14 billion, and net market appreciation of $23 billion.

Assets include private equity funds, hedge funds, mutual funds, credit funds, and separately managed accounts for individual and institutional investors.

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Investment management

Goldman Sachs (GS) provides investment management services. It also offers investment products through separately managed accounts and vehicles such as mutual funds and private investment funds.

These vehicles are spread across all major asset classes. Clients include both institutions and individuals. They also include wealth advisory services, portfolio management, financial counseling, and brokerage and other transaction services.

Its major competitors include Morgan Stanley (MS), JPMorgan Chase (JPM), Bank of America (BAC), and Wells Fargo (WFC). Together, they account for ~28.6% of the Financial Select Sector SPDR ETF (XLF).

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