Goldman’s Rebuilt Quant Approach

When quantitative equity funds experienced a meltdown ten years ago, Goldman Sachs (among the hardest hit) “began to rebuild the strategies with less leverage and more diversity,” according to a recent Bloomberg article. “A decade later,” the article says, “the quant unit has clawed itself back to respectability,” and now manages about $110 billion. But the team faces stiff competition, “with almost every asset manager chasing quant money, betting on similar factors and shaving fees on exchange-traded funds to near-zero.” The article explains that the Goldman unit now “uses leverage in only some offerings and monitors markets for signs that […]

Environment Could Be Ripe for Small- and Mid-Cap Stocks

Even though their post-election surge has recently cooled, both small- and mid-cap equities remain well-poised in today’s market environment, according to two portfolio managers at Goldman Sachs in a recent Barron’s article. The authors outline the following supporting factors: President Trump’s’ agenda could “benefit small- and mid-cap companies disproportionately” since a large portion of their revenues come from domestic operations. Corporate tax reform could also have a bigger impact on smaller companies. The post-election surge might be a good sign. Historically, the authors argue, “months with the highest Russell 2000 returns have been followed by even stronger periods of performance, […]

Goldman: Fund Managers Relying Too Heavily on U.S. Stocks

An analysis of professionally managed investment portfolios revealed to a team of Goldman strategists that “many investors are missing important potential sources of return as a result of putting too many of their “risk” eggs in one basket—U.S. equities.” This according to a recent article in Barron’s. The article argues that many portfolios appear to be overlooking “potentially attractive” opportunities in emerging market, emerging market debt and small-cap equities (in Japan, Europe and other non-U.S. developed countries). It also underscores the distinction between risk allocation and asset allocation, stressing that a “large allocation to a few assets classes can lead […]

Goldman's Cohen Sounding Bullish

Goldman Sachs’ Abby Joseph Cohen says the improving economy makes for a bullish outlook for equities. Cohen tells Bloomberg Surveillance that with the economy growing at about 3% and corporate earnings growing in the high single digits, she thinks the S&P 500’s fair value will be about 2150 a year from now.