Goldman Sachs ( GS) saw investors pull $3 billion in cash from quantitative hedge funds that have been shaky in an unpredictable market. Half of Goldman's hedge fund redemptions came from its flagship fund, Global Alpha, according to Goldman CFO David Viniar, speaking during a fourth-quarter earnings call. Ringing in at about $10 billion in assets, Global Alpha and other quant funds, which use trading strategies centered around computer models that identify arbitrage opportunities, have been whacked due to erratic spread widening.
Goldman Sachs: Not Just a Hedge Fund
Global Alpha saw declines of 6% in its fund during the month of November -- a month described by investors as even worse than August, when a crisis of confidence created froze up market activity. Global Alpha saw a total decline for the year of 37%, according to Bloomberg, citing investors in the fund. Viniar said that Goldman is happy having those funds shrink so that they could be more nimble in investing. "We are OK with those funds being smaller," he said. "We think the fund had gotten too big," he added. Alpha and Goldman's other quant fund's performance have been a sore spot for what has otherwise been stellar performance at the firm, which reported fourth-quarter earnings of $3.22 billion, or $7.01 a share, in the latest quarter, on revenue of $10.74 billion. That easily outpaced the expectations of analysts surveyed by Thomson Financial, who were looking for a profit of $6.61 a share and a top line of $10.16 billion.