Hedge Funds Boost Goldman Sachs

Stakes in Credit, Real Estate, Private Equity and Hedge Funds Return $10B to Goldman Sachs

Goldman Sachs, an American multinational investment banking firm, is pleased to announce that stakes in credit, real estate, private equity and hedge funds produced 6 percent of the firm’s total revenue in the past five years and 3 percent of revenue over the past decade.
The company previously said the investments generated an immaterial portion of total revenue since the bank went public in 1999.
Goldman Sachs has traditionally taken significant stakes in funds offered to its clients, leading investors and analysts to question how much revenue will decline when the holdings are reduced. Gains from those investments account for almost half of the $24 billion in revenue in its investing and lending segment over the past five years.
The Volcker Rule limits banks’ investments in covered funds to 3 percent of Tier 1 capital, meaning Goldman Sachs’s stakes would be capped at $2.35 billion at the end of 2014. The Federal Reserve has pushed back the deadline for meeting the limits and indicated it will move the date to July 2017.
The firm had $9.84 billion of fund investments as of Dec. 31, down from $14.4 billion a year earlier, according to Monday’s filing. The biggest reduction was in credit funds, where the firm’s holdings fell 72 percent to $1.02 billion.
Source: Bloomberg

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