Goldman Sachs Corp.'s cash management business says it wants to develop share by mining more banks in the United States and by looking abroad for clients.
The business, which has developed $125 billion of assets under management since opening in 1981, has increased managed assets by 20% to 25% in the past 12 months and ranks among the top three institutional money market fund managers globally. Dave Fishman, a co-chief investment officer at the unit of the Wall Street company, said half of its distribution is through banks and he hopes to develop share in this segment.
Mr. Fishman projected 10% to 20% annual growth for the next three to five years.
"Our mission statement is to be the preeminent partner, the top investment manager, and the best in client services," he said, "and [to] connect our clients to other resources at Goldman Sachs. We are working to create partnerships and get relationships that are mutually beneficial."
The business has relationships with 1,000 U.S. banks.
"We have a pretty robust roster of clients that runs the gamut from small community banks to large global banks and everything in between," he said.
Beth Anderson, also a co-chief investment officer at the unit, said Goldman's success in cash management would rely on continued organic growth.
"Going forward, we are going to have to target the large banks' offshore businesses," she said. "We have had good distribution through U.S.-based global banks. Offshore growth is one of our largest distribution opportunities."
The company plans to target Europe with its cash management products and services. Ms. Anderson said that banks doing business in Europe have a lot of interest in Goldman's offshore and onshore products. Mr. Fishman said that, to be the preeminent provider, the cash management business must add products to satisfy client demand, but he did not specify any potential new product.
Its products for institutional and individual investors worldwide include taxable and tax-advantaged, onshore and offshore, and dollar-, euro-, and sterling-denominated money market portfolios. "As banks get larger and larger, they are dealing with multinational corporations that have onshore and offshore needs that we will need to satisfy," he said.
Ms. Anderson said Goldman Sachs' cash management unit is developing its sales force outside the United States. "The more outgoing calls the better," she said. "This is the kind of sale where it can take a year to get on a bank platform. This is not low hanging fruit. We are trying to develop long-term relationships."
The unit also wants to continue adding share in the United States where, Mr. Fishman said, cash management and money market funds are mature business lines. "Virtually every bank in the U.S. has heard of us and uses money market funds," he said. "Some multinational corporations haven't. We want to grow market share with our existing customers and grow share as a whole by using education to convert new users that are not familiar with our products."
"We have more scope to get," Ms. Anderson agreed, "and more names to partner with."
Many smaller U.S. banks are potential partners, Mr. Fishman said.
Analysts said it is difficult for companies to gain share in cash management and money market funds because so many banks offer proprietary money management products. For the most part customers do not mind whether these products are proprietary, the analysts said, because most money funds are "carbon copies."
Most large banks have their own money market funds, Ms. Anderson conceded, and large competitors such as JPMorgan Chase & Co. (which is No. 1), Federated Investors Inc., and Reserve Funds also have considerable share.
Mr. Fishman said Goldman can grow if it secures partnerships with more institutions. "If these institutions can grow their assets, we will grow with them," he said. "We will be able to distribute our funds, and they will be able to grow their business."
Ms. Anderson said that beyond Europe Goldman plans to expand its cash management business into Asia.
"We are looking into China and Japan, and we think that there is a great opportunity there," she said. "We don't have specific plans in China yet, but we think there will be some great opportunities early next year or later this year."
