Goldman's Achilles Heel

Well even Goldman can't have it all its own way. Even the illustrious Wall Street firm, which has thrived and prospered this year while most rivals have stumbled, has a weak spot. And, yes, it's that once-$10bn flagship Global Alpha hedge fund.

Bloomberg reports that, according to two unnamed 'investors', the fund is likely to drop around $6bn in assets this year (around 60% of its value), after bad investments and client defections. According to the news agency, the Global Alpha fund has lost around 37% of its value this year through November 14th (mostly through losing bets on stocks, currencies and investment-grade debt in August, when it lost 22.5% of its value), and on top of that the fund has been put on notice by clients that $2bn will be pulled in the fourth-quarter.

Goldman has consistently denied speculation that it is to liquid the fund, and is determined to get it back on track. In September the firm wrote to investors saying that it appreciated their forbearance through what it described as a 'difficult period', statin that 'we (the) believe investment opportunities remain attractive'. Two months on and there appears to be no sign of a turnaround. Goldman CEO Lloyd Blankfien is, however, putting a brave face on it. 'Those funds are coming down in size', he said. 'We're happy with that. We're working on making those funds better, and when they're smaller they'll be more nimble'.

READER COMMENT:

'What's the opposite of Alpha ? Goldman should come up with another name!'.

JefferiesAnd the Best Place to Work in the global financial markets 2017 is...

Register for Financial Markets News Alerts