The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.
NEW YORK (
is purchasing India's Benchmark Asset Management Co., a big provider of exchange traded funds that was founded in 2001 and has around $700 million in assets under management. Goldman's asset management business competes with those of other leading financial institutions like
.Asset management constitutes about 11% of our $164 price estimate for Goldman's stock. Comparatively, bonds, currencies & commodities trading represent the largest contributor to our Goldman price estimate, at 38%.
Goldman Launching New Actively Managed On-Shore Funds in Asia
Though Goldman has held an asset-management license in India since 2008, these operations have been limited to providing research for offshore funds that invest in Indian and other emerging-market stocks. However, in an attempt to capitalize on the increasing wealth of people in emerging markets, Goldman is now planning to launch actively managed on-shore funds in India as well as other locations across Asia.
In South Korea, for example, Goldman is planning to enter into a partnership with Tong Yang Securities Inc., to provide asset-management services to Korean retail investors.
Upside to Assets Under Management
Goldman Sachs' assets under management increased at an annual growth rate of 13% between 2005 and 2009, hitting $870 billion by the end of that period. Going forward, we anticipate a more moderate annual growth rate of 1.75%, bringing the total beyond $1 trillion by the end of our forecast period.
In light of stricter regulations expected for its trading business, Goldman Sachs is looking to expand its asset management business, notably in the fast-growing Asian markets. Such trends could suggest upside to our base case forecasts.
To highlight the upside sensitivity to Goldman's stock value, we estimate roughly 2% upside to our $164 price estimate for Goldman's stock if the assets under management reach $1.2 trillion by the end of our forecast period.
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This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.