Published: January 01, 2011
Liquidity management is a core capability within Goldman Sachs and has remained a strategic focus since the inception of the firm’s asset management business. Leadership in cash management dates back to 1981, when the Fixed Income Division acquired management responsibilities for $2bn in two institutional money market portfolios. In 1988, Goldman Sachs Asset Management (GSAM) was formally established around this small but growing business.
Today, Global Liquidity Management encompasses GSAM’s money market and short-duration fixed income businesses and approximately 35% of GSAM’s total assets under management1. Our liquidity solutions encompass commercial and government securities as well as multicurrency options including US$, GBP, euro, AUD and yen. Reflecting the strength of our capabilities and investing ability, GSAM is one of the top five institutional money market fund managers globally(2).
Kathleen Hughes, Co-head of Global Liquidity Sales commented: “We are delighted to receive the TMI Awards for the Best Money Market Funds in Europe and in North America. We remain committed to our conservative approach, focusing on effectively managing portfolios by seeking to preserve capital and maintain a high degree of liquidity. As we celebrate 30 years of Global Liquidity Management in 2011, with a 15 year anniversary for our offshore business, we believe these awards are testimony to our expertise.”
We aim to meet our clients’ need for preservation of capital, liquidity and competitive yields through: liquidity solutions which we believe are high quality; support in navigating the financial markets and expertise in expanding organisational resources.
A strong team and proven investment process
Liquidity solutions at GSAM begin with a mission to provide preservation of capital and daily liquidity. We seek to accomplish this mission through the strength of our portfolio management team and investment process.
GSAM investment professionals, for example, actively participate in numerous industry working groups, providing feedback that helps shape policy and money market industry regulation. “Working with the relevant industry bodies I’ve found that clear, insightful and engaged discussions at the highest level with senior policy makers, can help to shape regulation for the benefit of investors” said Kathleen, an IMMFA Board Member. Senior GSAM professionals have helped shape best practices in risk management, developing risk analysis tools adopted widely by the industry. Our senior portfolio managers offer an average of 14 years’ industry experience and the team has experienced historically low turnover, adding organisational continuity to the advantage of experience.
Our investment process benefits from years of continuous evolution as well as firm wide expertise. Combined inputs from the Goldman, Sachs & Co. Credit Department and GSAM, for example, seek to mitigate risk within our money market portfolios. In addition, weekly meetings between senior Goldman, Sachs & Co. economists and Goldman Sachs Asset Management portfolio management ensure that our strategy across all portfolios is consistent with current economic policy.[[[PAGE]]]
Jason Granet, Head of International Global Liquidity Management added “A consistent process which seeks to add value while preserving capital is critical for any money market strategy. In almost 30 years of global cash management and in all market cycles, Goldman Sachs has consistently delivered preservation of principal with same-day liquidity. We remain dedicated to constructing high-quality portfolios by adhering to strict credit guidelines set forth by the Goldman, Sachs & Co. Credit Department, a separate operating entity within Goldman, Sachs & Co.”
Active portfolio management by expert sector specialists results in investment solutions that we believe are optimally structured along the yield curve. Rigorous management of credit, interest rate and liquidity risk form the cornerstone of our investment process.
Separate and independent credit analysis
GSAM’s strict adherence to credit quality supports our mission of providing liquidity and the preservation of capital even when the risk environment changes swiftly and unpredictably. In addition, since 1981, we have extended and strengthened our focus on credit quality by leveraging the Goldman, Sachs & Co. Credit Department. This group comprises more than 255 credit professionals, focuses exclusively on credit analysis, and is a separate operating entity from GSAM.
“Investors choose money market funds to preserve their capital, and that is foremost in our minds when managing credit risk” commented Jason. “We only invest in credits that have been approved by Goldman Sachs & Co.’s Credit Department, which provides a layer of independent and unbiased analysis to every credit strategy we employ.”
The Goldman Sachs Credit Department constructs and maintains GSAM’s Money Market Credit Approved List; communicates daily with GSAM portfolio managers to review potential credit risks, discuss changing credit conditions and gauge liquidity of issues; and reviews and approves all additions, deletions and/or changes to the Approved List. As a result, our clients have a choice of liquidity solutions – with an unbiased credit review process that helps evaluate and manage risk in all environments.
Support in navigating the financial markets
In addition to liquidity solutions which we believe are high quality, institutional investors who select GSAM as their liquidity manager gain access to capabilities from across Goldman, Sachs & Co. In all environments, clients have regular access to our portfolio management team. In addition, ongoing perspectives on the global economy, regulatory and industry change and liquidity management strategies support informed investment decisions.
Expertise in expanding organisational resources
GSAM’s Global Liquidity Services team engages with your organisation on every level, expanding your internal resources through highly tailored service, product, operational and trading support. In addition, the Goldman Sachs Global Liquidity Services Portal delivers investing simplicity, operational efficiency and expert resources to address clients’ need for trading, reporting and liquidity insights. Goldman Sachs Money Market Funds, select Goldman Sachs Equity and Fixed Income Funds, and money market funds from leading external providers are available to different investors (if suitable and/or appropriate for the organisation). A majority of the top 20 money market complexes are accessible through the Goldman Sachs Global Liquidity Services Portal, representing 87% market share3. Through the Global Liquidity Services Portal, clients can manage multiple liquidity investments on one screen and gain increased confidence and control through a single access point.
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